Quick Take

  • With Gift Cards tied into your Merchant Processing Account or POS System, you take in cash before you deliver the products or services, giving cash flow a boost
  • The merchant advocates at Real Merchant Solutions can show you how even the smallest businesses can cash in on the secrets the big retailers have known for years

Read the full details below

Gift Cards are everywhere. Every major merchant offers them, and you even see them on racks at grocery stores. If your business isn’t cashing in on this explosive way to increase your bottom line, you’re leaving money on the table. Piles of it.

Gift Card Display

Let’s talk breakage. You may not be familiar with the term, but sharp marketers are. Here’s how it works.

Say you’re running a store or a restaurant with a popular following. Offer gift cards for sale in whatever denomination your customers want, and you’re almost printing money. Follow the numbers:

Assume you sell 100 gift cards sold at $25 each, so you take in $2,500… right now. What’s your product cost… today? If you raised your hand and said you have no costs, go right to the head of the class. Take in $2,500 without any costs for the product. At worst, that $2,500 represents an interest free loan, and at best, it’s an outright gift. To you. A good day’s work for sure.

But wait: eventually, those gift cards are going to be redeemed, you say. Sooner or later the folks who received the gift cards are going to wander in and soak up that big windfall you say.

Maybe. In December 2012, it was estimated that the total value of unredeemed gift cards in the United States was $41 billion.  Billion. with a “B”. That’s a lot of happy days for merchants. And a lot of gift cards sitting in the sock drawer.

What you can expect is that between 15 to 30% of the gift cards you sell will never be redeemed, so that’s essentially free money.

But wait, there’s more. Studies have shown that when Mr. and Mrs. consumer roll into your shop with that $25 gift card in their pocket, it feels like free money to them too. So if they might have spent $25 without the gift card, they might spend $30 or $40 or $50 or more. and chances are good this is a new customer who might never have spent anything if your generous customer hadn’t paid you for the privilege of bring you a new customer. It really doesn’t get much better than that.

Don’t need gift cards you say? Happy with gift certificates? What year is it where you are: 1964?

The American consumer is all about convenience, and plastic is the coin of the realm. Gift certificates are awkward, often have to be signed individually, and are not easily negotiable. What if the person with the $25 gift certificate comes in and spend $14.95? Do you give them another certificate for $10.05? With gift cards, whatever value is unspent remains as a credit on their card for next time. And next time, they can just hand you the card and you can swipe it for them and tell them the balance.

Finally, we know that some merchants have been down this road before and purchased gift cards from another processor and don’t want to lose the value of what they paid for. No worries. Chances are good that we’ll be able to take those cards and reprogram them so they can be used with your new merchant account.

If you’re not riding the gift card train, you’re missing out in a big way. Maybe, Amazon, Barnes & Noble, Applebee’s and thousands of other successful merchants know something you’ve missed.


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Russell Halley

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