Basically, a gift card is a prepaid card that you can use to make purchases. You can use gift cards at a single store or in a group of stores, such as a chain or mall, or for shopping online.
It is a quick and easy way to give someone a gift and more and more platforms now even offer the possibility of sending gift cards in electronic format.
For the merchant, the gift card can be a powerful marketing tool and a significant source of revenue.
What are the rules surrounding gift cards?
The Government of Canada website informs us of the rules in effect on the sale and use of gift cards, depending on your province or territory.
https://www.canada.ca/en/financial-consumer-agency/services/payment/gift-cards.html
In Quebec, the consumer can demand to receive the balance of his gift card in cash when the balance thereof reaches $5.00 or less.
Most gift cards do not expire. However, depending on the regulations in your province or territory, promotional or charitable gift cards or cards redeemable for a specific service may have an expiry date, but this must be indicated on the card.
As a general rule, there are no fees associated with the purchase and use of a gift card, except for a service offered online where the supplier could add a management or service fee on the transaction.
For example, in some provinces or territories, merchants may charge a fee to replace a lost gift card, personalize a gift card, activate a card, or keep a mall gift card active after a certain period.
Check your gift card balance
You can usually check your gift card balance on the merchant's website, directly at the merchant, on the transaction’s invoice, or by calling the phone number listed on the card.
When you buy a gift card, you do not pay tax on its value. The merchant charges the tax amount when you use the card to purchase a taxable product. For example, you pay tax on your purchase made with a gift card in the same way as when you use a credit card or cash.
What are the benefits for the merchant
When we buy gift cards from a merchant, we prepay our future purchases, which is very interesting for the merchant since he accumulates funds in addition to ensuring additional income when the user will come and take advantage of their gift card.
It should be noted that Canadians spend an average of $200 per year on the purchase of gift cards and this trend has increased sharply during the pandemic.
Ø 5 % of gift card holders make more than one visit to spend all of it.
Ø 41 % of them will visit a new establishment thanks to the latter.
Ø 21 % spend more than the amount of the gift card.
Ø 21 % won't use all of it (or won't use it at all).
The gift card is also a promotional vehicle for the merchant. Its image circulates through the hands of different consumers. So, in addition to the financial impact that gift cards will have, these can be included in a marketing strategy.
To stimulate sales, the merchant can offer a percentage of the value of the card as a bonus. For example, buy a $100 gift card and get $110.
In short, a gift card program requires some investment, including the purchase of the cards, the graphic work for its design as well as monthly membership payments. In return, the plastic card or electronic version eliminates all the handling and management associated with traditional paper or handmade gift certificates. Reports are then centralized in your system and the risk of error or fraud is greatly reduced.
Gift cards won't replace a loyalty or rewards program, but they do provide opportunities to introduce new users to your products and brand.
You would like to create your gift cards or you have questions? Do not hesitate to contact us by email at info@freebeespay.com or by phone at 1-888-509-0388.
