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Benefits and drawbacks of reward playing cards

Benefits and drawbacks of reward playing cards

Benefits and drawbacks of reward playing cards

In the USA, reward playing cards accounted for $19 billion in gross sales through the 2005 Christmas vacation season and $25 billion throughout the identical season the next 12 months. Analysts agreed that the large recognition of reward playing cards was attributable to their comfort (each when it comes to buy and mail) and their obvious respectability. Reward playing cards by some means managed to convey some consideration on the a part of the giver, in contrast to a test or an envelope of money.

Even so, nevertheless, reward playing cards introduced sure drawbacks for the patron. In 2006, many playing cards nonetheless had quite a lot of restrictions, together with expiration dates, dormancy fees (for instance, the worth of a card may lower by $2 if it was not used for six months), and the shortcoming to mix the cardboard stability. with one other type of cost (for instance, you could have a $30 reward card and need to use it as half cost for a $50 towel set; in some circumstances, the cardboard is declined for “inadequate funds” , so you may solely use it for a purchase order of $30 or much less).

Benefits and drawbacks for the retailer

As well-liked as reward playing cards are with customers, retailers love playing cards much more. Retailers profit from promoting reward playing cards in quite a lot of methods. First, they obtain cash upfront for the acquisition; if the reward card is misplaced, destroyed or for any motive not redeemed, the retailer has successfully obtained “free cash” for the unique card buy. Second, the reward card attracts new prospects (the cardboard recipients) to your shops. Third, the individual redeeming the reward card typically spends greater than the quantity on the cardboard. Lastly, it typically occurs that when the reward card is redeemed, there’s a small unspent stability left on the cardboard. If this stability will not be spent at a later date, the retailer makes a further revenue. In 2006, JC Williams Group, a worldwide retail consulting agency, estimated that about 10% of the pay as you go worth of reward playing cards was by no means spent.

The primary drawback for retailers is that reward playing cards are comparatively costly to fabricate. Relying on the amount of playing cards a retailer orders, playing cards can price as much as $3 every. The retailer should additionally pay charges to the third-party firm that manages the digital community used to course of the playing cards.

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