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Ahead of Christmas, local communities are eager to find ways to help small businesses weather the increased hardships associated with the current Cost of Living crisis.
During the festive period, some people have suggested ordering extra takeaways, shopping online, and tipping extra to service workers. Another potential solution is purchasing Christmas gift cards from small businesses.
But not all small businesses are ready for gift card sales yet. Luckily, it doesn’t take much effort to start. Here’s everything you should know about selling Christmas gift cards at your small business.
Reasons small businesses should sell Christmas gift cards
There are many reasons why you should consider selling Christmas gift cards. Here are the top three:
They increase your revenue now. When a customer buys a Christmas gift card today, you get that revenue today. You collect the payment upfront and remove purchases from your stock when customers redeem their cards. This can be especially helpful in generating revenue ahead of the festivities.
They can attract new customers. Existing customers can give gift cards to a friend or family member who doesn’t know about your store. It’s a great way to promote word-of-mouth marketing.
They boost customer loyalty. Once a customer purchases a Christmas gift card, they have to return to your store to use it. Customers may even spend more than the gift card’s balance, meaning more revenue for your store.
Types of Christmas gift card programs
It may seem like all gift cards are all the same, but they aren’t. There are two primary types of gift card programs: open-loop and closed-loop.
Open-loop gift cards
An open-loop gift card can be purchased at one location but used at multiple locations. Common examples include Visa or Mastercard gift cards provided by select vendors. “Restrictive open-loop gift cards” may be specific to regions. Examples include gift cards accepted at businesses in a co-op or business network.
These types of gift cards provide flexibility to buyers. But they don’t always generate direct revenue to the small business issuing them. Typically, vendors print open-loop gift cards on-demand. Small business owners may have to pay a fee to use this option.
Closed loop gift cards
Customers can only purchase and use closed-loop gift cards at your business. These gift cards provide less flexibility to the consumer but more profit to the small business issuing them. Typically, closed-loop gift cards are free to activate. Neither the small business owner nor the customer has to pay additional fees. But the small business issuing the card may need to purchase cards from a vendor, merchant bank, or point of sale (POS) provider.
Gift card laws to keep in mind
Before you start your gift card program, familiarise yourself with the applicable UK laws and regulations.
The Consumer Rights Act (2015), published by the UK Government, includes legislation that gift card sellers must adhere to. For example, gift card sellers must send their goods to their purchaser within 30 days, if no date was already agreed before purchase. If this is not done, a full refund needs to be given to the purchaser.
Unlike many countries, the UK has no expiry date laws for gift cards, but it is still important to make the expiry date clear on the card. Check the official Consumer Rights Act legislation, or reach out to a legal professional, for more comprehensive advice on gift card laws.
How to sell Christmas gift cards in 4 steps
Now that you understand more about gift cards, your small business is ready to set up a Christmas gift card program.
1. Choose your gift card system
Choose how you plan to process your Christmas gift card orders. For many small businesses, the easiest option might be to use whatever gift card option is in their POS system. You can also purchase them from vendors and create a new “item for sale” in your POS system. Another option is to buy them through a bank that offers the service. Once you choose how you’ll process cards, you’ll need to order them. You have a few options.
Online or e-gift cards
By partnering with your POS system provider, you may be able to offer gift card purchases online. Just like any e-commerce transaction, items are processed online. When customers are ready to purchase in-store or online, they can print e-gift cards or show them to you on their smartphones. Your business may only have to pay a small processing fee but won’t have to worry about purchasing physical gift cards. Most commonly, these cards will appear as a barcode, an identification number, or both.
While a bit of an old-school option, you can use gift certificates if you don’t have a POS system that can track gift cards. Instead, you can print your certificates and track purchases in a digital ledger or create a new line item in your POS system. Some businesses also use a mix of gift cards and gift certificates. For example, a spa might offer a gift card for any purchase and a certificate for a “free massage.” However, gift certificates can be easy to counterfeit and aren’t the safest or most reliable option.
Electronic strip or barcode gift cards
The last option is a physical gift card, ordered from your POS provider, a merchant bank, or a third-party vendor. These cards often look like credit cards, with magnetic strips or barcodes and identification numbers. Many vendors will provide you with customisable options so that you can include your brand information on the card. Although they can be a pricier option, customers may prefer the physical card over a paper certificate or e-card.
2. Input gift cards into your system
Each POS system will have a different method for inputting your cards, but they’re all similar. Scan or swipe a blank card. You’ll be prompted to choose the amount of money for that card. Your customer will pay the amount on the card to complete the transaction. When customers come in to use a gift card, the gift card should appear as an option for tender in your POS system.
3. Establish gift card policies for your team
Once you have your POS system set up to sell Christmas gift cards, tell your team how it works. Share how to process gift card transactions and how customers can make purchases with gift cards. You’ll also want to inform them of any limitations you have on gift cards. Policies might include limiting the number of gift cards customers can purchase or not allowing customers to buy gift cards with gift cards. Other things to consider are how to track purchased cards and set fair expiration dates.
4. Start selling and tracking gift cards
Now that your staff is on the same page, you can start selling gift cards online or in your store. If your POS system allows, you might track gift cards by attaching them to customer profiles in your system.
As your small business sells Christmas gift cards, you’ll be able to accept those profits upfront. Your customers will be happy to support you and look forward to shopping with you in the future. Capitalising on selling gift cards over the festive period can be a great way to generate revenue in challenging times.