History of Gift Cards
A gift card is a special type of product. Its value can be used as payment toward future orders from your online store.
Gift cards are a form of prepaid debit cards loaded with funds for future use. In some situations, they can be used to pay for a portion of a purchase, with cash, debit or credit used to balance the expense.
Gift cards is as old as some millennials, yes you heard right. They have been in use for 27 years now.
In North America and in the UK, it is referred to as a gift certificate and gift token or gift voucher respectively.
The gift card was introduced by Neiman Marcus the owner of Neiman Marcus group Inc, but Blockbuster Entertain was the first company to lunch out test-marketing on a large scale in 1995.
Before the advent of gift cards, gift certificate was in use.
The Gift certificate was easily counterfeited using color copiers and printers, this is because a gift certificate is traditionally printed on paper of various thickness which also makes it easy to damage.
The value of a gift certificate is hand written by an employee which also makes it prone to errors.
Hence, gift card came in the picture and easily replaced it as gift cards have unique codes which are in the database of the owner company, and they can only be used by the store that owns them or any authorized stores.
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Gift card are printed on plastic which is more durable. Gift cards have the option of either having a face value (which does not require tracking through a point of sale system) or a reloadable card (will be tracked through a point of sale (POS) system).
There is much less room for error if the cards are put through a POS system or a one-time use face value card than if an employee handwrites the new amount. Gift cards will generally have a barcode or magnetic stripe to transfer the information into your POS system.
This gives the opportunity to track the cards that have been sold. Gift certificates will occasionally have a barcode or a number printed, however most will simply have the value written on them. Without a POS system to process the gift, you will be unable to track valuable data.
Blockbuster’s first gift card transaction was processed by Nabanco of Sunrise, the developer of the first third-party platform for the processing of gift cards using existing payment infrastructure.
Once the gift card was introduced by Neiman Marcus and Blockbuster Entertainment, the Mobil gas card was introduced, which initially offered prepaid phone value provided by MCI Kmart was next with the introduction of the Kmart Cash Card, which in the early generations provided prepaid phone time with AT&T. Kmart and Mobil later dropped this feature, as it was not profitable for them.
The Kmart Cash Card was the first replacement for cash returns when a shopper did not have a receipt for a gift.
This practice of giving a cash card in place of cash for non-receipted returns is commonplace today with most merchants.
What this means is, if you returned an item without a receipt to a retail store, you don’t get a cash back instead you get a gift card of same value which you can use at a later time to buy from the same store.
From these early introductions, other retailers began to adapt a gift card program to replace their gift certificate programs.
Gift cards went from paper certificates (started by Neiman Marcus and Blockbuster, but was destroyed by fraud when color printers became widespread), to plastic to digital. As of 2018, retail gift cards have grown to a $160B market annually in the US.
The explosion in gift card growth is due to the challenges in gifting, knowing what a person wants, product details such as size/color/style, and knowing a shipping address. These barriers made gift cards the most convenient and easy gift.
Gift cards have also become the most requested gift during the holiday season due to the flexibility they offer and recipients not needing to get stuck with something they don’t want or need to return.
The gift card is used by people from different countries to buy from stores of other countries cheaply. Let’s say, a Nigerian wants to buy from the US, the dollar to naira difference makes it difficult because the price will be on the high side.
But if there was someone who doesn’t have need to use his or her gift card or would rather convert it to cash at an agreed rate, the person who wants to buy from the US buys this gift and it turn uses it to buy what he/she needs without worry of the dollar to naira rate.
With the gift card going almost completely digital, it is safe to say it is far from dead.
As this well-established gift idea moves into the future with modern technology, it is likely to evolve into a completely new paradigm, with recipients ready to use them online instead of sitting in the wallet until it is physically used or expires.
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