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Industry News

Gift cards can be a gift for merchants too

By Pivotal Payments

16/09/2009 - The benefits of accepting credit and debit cards have caused payment processing technology to become a relatively standard facet of business operation.

Yet many businesses overlook the sales, marketing and cash flow benefits of issuing gift cards, which can often be accepted using the same point-of-sale terminals used for credit and debit cards.

Gift cards present a number of advantages for merchants, primarily with respect to cash flow, because the store gets paid before any goods or services are purchased. In addition, a number of gift cards go unredeemed - termed "breakage" - which translates to essentially free money for the business.

Gift cards can also increase a business' bottom line because customers very rarely spend the exact amount of the gift card - the person often chooses to buy an additional item and pay the remaining balance instead of leaving a small amount of money on the gift card. In addition, in using the gift card, the business brings in a customer that they may not have previously acquired, which presents the opportunity for both new and repeat sales.

Businesses unsure whether they accept gift cards are encouraged to check with their merchant account provider.ADNFCR-2514-ID-19364981-ADNFCR

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