Did you know that when gift certificates were introduced in the 1930s, only large department stores kept them behind the counter and sold them at the request of a few customers? The certificates have gradually evolved into gift cards that are currently the most popular Christmas present in America! Gift certificates are basically vouchers with either point or dollar values that can be redeemed in terms of products or services at particular stores or businesses.
The idea gained popularity with time and McDonald’s introduced a Christmas gift certificate program in 1970.
Although Blockbuster is largely credited with creating the first modern gift card in 1995, the idea can be traced back to 1992.
By then, Maritz Travel Company had been using a paper gift certificate known as “Exclusively Yours (EY) check.” It was one of the few gift certificates that could be redeemed from multiple merchants and for various uses, including retail shopping and travel.
Gradually, the award earners had the freedom to pick rewards that suited their personal lifestyles. Within six months only, the EY check business skyrocketed from $20 million per annum to more than $130 per annum.
The boxes of EY checks the operational team received for processing were as large as a small car! The success was almost suffocating and an alternative had to be sought.
That’s when the idea of combining the benefits of gift certificates and debit cards was hatched. The result was the stored-value gift card, which is a plastic card with either bar code or magnetic strip pre-loaded with point or dollar amount.
While the original gift card was reloadable and could be used in different store locations, other cards were developed that could only be used at specific department stores, counters and even registers.
Blockbuster helped to revolutionize the industry by displaying the gift cards openly. The cards were formerly only sold as novelty items that were largely kept out of sight.
Gift cards became more popular because they offered several benefits over gift certificates. For example, color photocopiers made it easy to counterfeit the certificates, something the cards do away with.
Advantages of gift Cards to Recipients
- A wide choice of redemption options
- The ability to receive awards almost instantaneously
- The possibility to store value or points until they are ready to use them or they find what suits them best
- Sharing shopping experience with family members
Benefits to Businesses
While individuals use gift cards to give presents to their loved ones, businesses use them in numerous ways, including:
- Recognizing performance
- Sales incentives
- Spot rewards
- Non-sales recognition awards
- Business gifts
- Service awards
- Consumer promotions
- Safety awards
- Dealer incentives
- Wellness programs
- Establishing and maintain business relationships
Gift cards have the versatility and flexibility but not the downsides of cash. They combine the benefits of cash with those of merchandise.
The use of gift cards has come a long way since the concept was introduced. They have simplified the lives of both businesses and consumers.