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Paper or Plastic? Gift Certificates vs Gift Cards


Gift CertificateWhen was the last time you used a paper gift certificate? Remember receiving a much loved slip of paper deftly inserted inside a birthday or Christmas card? Some merchants have decided to go with an alternative to the paper gift certificate.

Plastic Vs Paper

Paper gift certificates are being replaced by plastic gift cards and online e-gifts and here’s why:

  • With a magnetic stripe gift card, the entire dollar amount on the gift card is used on merchandise. The monetary value on a gift card is used on the purchase of goods and services directly from the retailer. When a gift certificate is employed for purchases, they are used like a cash transaction. If the value of the item is less than the value of the certificate, the customer will get cash back.
  • Loadable magnetic strip gift cards may still have unused dollar amounts on them. These minor un-redeemed amounts can be considered as ‘profits’. In addition, gift cards are re-loadable. This means that additional monetary value can be added to the un-redeemed portion to add more value to the card.
  • Studies have shown that “when retailers switch from paper gift certificates to gift cards, they sell anywhere from 50 – 100% more”. [1]
  • Rather than getting cash back for returned merchandise, card holders get an equivalent dollar amount restored to their card. This means that customers will be returning to your store to purchase items from you. Paper gift certificate holders would be refunded cash.
  • Paper gift certificates are not very easy to track. Gift cards and e-gift cards are easily issued and offer important opportunities for merchants to track and understand how customers purchase their items. Transaction recording and records are kept easily with gift cards and e-gift cards.

Growth of Gift Cards

Big name companies have been using gift cards starting in the early 1970s and 80s to offer a secure and efficient means of tracking customers’ purchases. Paper gift certificates although offer a means to give a gift offer little for the merchant to track its use.

Gift cards are used in a similar fashion to a credit card. Gift cards have a magnetic strip that is swiped at a credit card terminal or POS system. Information stored on the magnetic strip can offer merchants important information regarding purchases.

Gift card use has increased due to:

  • Ease of use
  • Increase security measures
  • Efficient reporting methods for merchants.

Register Your Gift Card

Gift cards are identified by a specific number code attached to a customer’s name. This means that if the card is lost or stolen, it can be used by anybody. It is recommended that gift cards be registered by the owner. This way lost or stolen cards can be reported.

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