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04/12/2009 -
Gift card acceptance has become one of the most popular merchant services for retailers of all sizes, especially during the holiday season when gift card sales soar and businesses see abundant returns.Yet when developing a gift card processing strategy, businesses should remember that not all gift cards are created equal, suggested a new study from research and advisory firm TowerGroup.
The study found that while store-brand gift card spending volume is expected to fall by 7 percent this year, spending volume for general-purpose gift cards, such as those offered by the major credit card processing brands, will increase by 3 percent.
TowerGroup reports that this phenomenon is likely due to the fact that consumers are trying to get the most bang for their buck by buying gift cards that can be used at a variety of stores, instead of being restricted to one store. The economy's precariousness has also made consumers fear that a store will go out of business before they can use a store-branded gift card, the report noted.
Yet the gift card market is expected to do well in the future, as it is a subset of the prepaid debit card market, which is "poised to grow heavily" next year.
To make the most of the gift card and prepaid card trends, businesses with merchant accounts are encouraged to ensure that their POS terminals can handle multiple different forms of payment processing transactions, experts say.
