As the holiday shopping season heads into its final phase, last-minute gift cards are expected to fly off the store shelves. This year, shoppers may benefit from a new technology designed to make those cards far more tamper-proof.
Schnuck Markets, a grocery chain in the St. Louis area, recently completed a 10-week pilot program with Digimarc that embedded a tamper-evident digital watermark directly onto its gift cards. The watermark replaces the standard activation barcode, which is typically protected by scratch-off strips or bulky packaging intended to deter theft.
With traditional gift cards, criminals have been able to cover legitimate barcodes with fraudulent ones, causing any funds loaded onto the card to be redirected straight into a criminal’s account. Under the new system, if a watermarked card shows any sign of tampering at checkout, it simply will not activate.
Early results from the pilot are encouraging. There were no reports of fraud involving any of the Digimarc-secured cards, and every gift card in the program was activated successfully.
Streamlined Processes
The new technology did not slow down the checkout process. In fact, 87% of cashiers reported that Digimarc cards activated just as quickly—or faster—than traditional gift cards. Employees also no longer needed to open packaging or visually inspect cards for fraud, a step that can delay checkout. The program required no changes for customers at self-checkout and did not interfere with existing in-store processes.
“From a technology perspective, the added layer of the watermark serves to be a simple and unobtrusive security measure that protects consumers and retailers,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research.
A Concerted Effort
Gift card fraud has long been a concern across the industry, with consumers losing more than $200 million to these schemes last year. Recent packaging improvements have already helped create an environment in which shoppers feel more confident and secure.
“While Javelin research shows that most consumers already feel safe using and buying gift cards, these efforts highlight the proactive approach that the entire prepaid ecosystem is taking to protect balances,” said Hirschfield. “What is most evident is the full-scale cooperation from packaging to program management to retailers and merchants working to solve the problem.”
