Gift and Loyalty Cards: Gift Certificates and Scrip

Gift cards, loyalty cards and gift certificates are common forms of scrip used by businesses. Scrip has a number of advantages over simple cash exchanges. Gift certificates and gift cards can be purchased and given as gifts, while loyalty cards reward customers for their patronage.

Gift cards and loyalty cards are both excellent marketing tools. Gift cards can help to bring in new customers that have never patronized your business before, and loyalty cards keep people coming back.

 

Scrip has its beginnings in American logging camps. In isolated logging camps with little cash, individuals could be paid in scrip, which could then be used to purchase goods at the company store. Military groups have also used scrip, both as a substitute for limited legal tender and to control spending.

Scrip is often used by non-profit organizations, usually in the form of gift cards. Retailers offer gift cards to charities at a discount. The charity then sells the gift cards at full price to its members and keeps the difference.

Selling scrip at a discount to charities offers a number of advantages to retailers. Although sold at a discount, the gift cards are not so heavily discounted that the business does not make a profit.

People who purchase charity scrip for a business can only use scrip at that particular store. As a result, charity scrip attracts customers that might not otherwise visit the store. Co-operating with local charities also increases positive local awareness of the business, which can hardly hurt a company.

Gift certificates have been used as scrip for many years, although their popularity has waned since gift cards and loyalty cards came on the scene.

Gift certificates are scrip equal to an amount paid by the customer. The customers then give the gift certificates to other people, who use the certificates at the store.

Prepaid gift cards have, for the most part, replaced gift certificates in most stores. Gift cards come in a variety of forms. While some are specific to a single store and can only be used in that store, other gift cards are "reloadable," allowing the card holder to add extra credit to the card.

Other types of gift cards are offered in conjunction with credit companies such as Visa and Mastercard. These gift cards function exactly like credit cards, allowing the recipient to purchase goods at any retailer that accepts credit transactions. However, once all of the money loaded on that card is spent, the card is no longer usable. Credit card gift cards are favored as a safe way to make Internet purchases.

Gift cards have a number of advantages, especially for large stores. With gift cards, the scrip is not usually contained on the cards themselves but on a computer database. When used, a gift card's ID number is used to access how much scrip remains on the account.

Gift cards have some disadvantages, at least from the point of view of the consumer. Gift cards issued from Joe's Big Books, for instance, can only be used at Joe's, which limits where and how the scrip can be spent. For this reason consumers often prefer credit card gift cards, which can be used anywhere the parent credit card company is accepted.

In many ways, loyalty cards are similar to gift cards. Gift and loyalty cards both have preset spending amounts. Both types of cards may be tied to a single business or may be prepaid credit cards that can be used anywhere.

The difference between gift and loyalty cards is one of intent. Gift cards are purchased by consumers. Loyalty cards are rewards, often earned by accumulating points in store or through Web site promotions. When customers accumulate enough points, they receive loyalty cards.

Loyalty cards can also be used to reward employees or as bonuses. Again, loyalty cards may be tied to a single business or may be used wherever credit cards are accepted.

Gift and loyalty cards have another advantage to businesses that is sometimes overlooked. Not all gift cards are completely redeemed. The amount left on the card that is not redeemed is straight profit for the business. The customer has already paid for the unredeemed portion of the card, but the equivalent value in stock has not been exchanged.

A significant portion of gift and loyalty cards goes unredeemed. According to the Great Lakes Scrip Center (a leader in the scrip/charity industry), up to $8 billion worth of gift and loyalty cards went unredeemed in 2006.

Resources

Gift Certificates (n.d.). Exclusively-Designed Greeting Cards with a Choice of Rewards. Retrieved March 2, 2008 form the Gift Certificates Web site: www.giftcertificates.com/business/
info/content/index.cfm?page_id=722&r=848&sessionid=
28196369955373516044&hid=0.

Gift Certificates (n.d.). Flexibility That's Sure to Please. Retrieved March 2, 2008 from the Gift Certificates Web site:
www.giftcertificates.com/business/info/content/
index.cfm?paage_id=723&r=849&sessionid=
79919282653197715074&hid=0.

Great Lakes Scrip Center (2006). What is Scrip? Retrieved March 2, 2008 from the Great Lakes Scrip Center Web site:
www.glscrip.com/howscripworks/index.aspx?
AspxAutoDetectCookieSupport=1.

Scrip (2005). What is Scrip? Retrieved March 2, 2008 from the Scrip Web site: www.scrip.com/FAQ.pdf.

Visa (n.d.). Prepaid and Gift Cards. Retrieved March 2, 2008 from the Visa Web site: usa.visa.com/personal/cards/prepaid
/visa_gift_card.html.