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How Can A Retail Management System Improve Your Store’s Gift Card Program?

Image of woman giving a gift card

retail management system must make sense of more than just dollars. It must also be able to understand other emerging forms of payment, such as mobile apps, mobile scans and those ever-popular gift cards.

Electronic gift cards are a payment method more customers use during and after the holiday season. With this form of payment, retailers must consider not only how their retail POS solution scans the card, but also how the retail POS accounting mechanism tracks the card’s spending limit, how much of the gift card to accept as tender and the process to get the cash from the gift card.

The latter of these — getting the cash from the gift card — will depend on who is managing the program. If you, as the retailer, manage your own gift card program, you’ve already collected the money. But when a third party is managing the gift card, you may not immediately receive payment for that transaction. Instead, you will have to bill someone else.

Knowing how your POS system handles these transactions can help you decide how to best manage your store’s gift card program.

When you manage your own gift card program, you collect the money up front, but you still need to know when the card is used and its remaining balance. You can manage that within your retail management system or have a third-party vendor track the balance. If you manage the program yourself, you have to be assured that your system prevents the gift card from being used beyond its spending limit. If you have multiple stores and each store has its own database, how is it communicating the gift card balance?

If an external third-party company manages your store gift card, you rely on them to track the balance. You won’t know each card’s remaining balance; your system only knows that you have $1,000 in gift card purchases. But then again, you already have the cash.

Now let’s say your retail location is within a shopping center and the mall management sells a gift card that can be used at any independent shop within the center. When a customer uses a shopping center gift card at your store, you probably won’t receive the cash right away. This gift card works like a voucher or a manufacturer’s coupon in that you rely on a third-party company to track the gift card balance, but you will also have to bill them to get the cash.

Unlike credit cards, many gift cards do not require the physical presence of the card at the POS station. For example, when a customer uses a credit card, the retailer pays a lower merchant fee if the card is physically present; a customer swiping the card into the POS system proves that. If the credit card number is typed in, the merchant fee is likely slightly higher because that method doesn’t prove that the card was physically present.

With gift card transactions, the card’s unique identification code can be entered to perform the transaction. Your retail management system should be equipped to gather gift card information from various mediums, such as a smartphone touchscreen or a printed Quick Response (QR) code.

Nearly everyone these days carries a smartphone, which is equipped with apps that make it easy to carry multiple store coupons or to digitally retain other forms of payment. These “digital wallets” are about carrying less but having more information — and more payment methods — at consumers’ fingertips. As a result, your retail management system must be able to adapt to emerging types of transactions, including electronic gift cards that will be especially popular around the upcoming holidays.