PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

What the Borders Bankruptcy Could Mean to the Future of Gift Cards

By Ben Jackson
July 29, 2011
in Mercator Insights
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Book seller Borders Group, Inc.’s liquidationplan calls for it to continue honoring gift cards and providingdiscounts to members of its loyalty program. The demise of theretailer and the process of its liquidation will have effects onthe gift card industry and give clues to the shape of things tocome.

The company’s chief executive officer, Mike Edwards, recently sentout an e-mail to members of the Borders Rewards program encouragingthem to use their gift cards and rewards membership perks to getdiscounts during the store’s liquidation sales, according to anumber of websites. The e-mail, which was posted on the consumeradvocacy site consumerist.com (http://consumerist.com/2011/07/borders-ceo-emails-goodbye-email-to-customers.html)also says the company will honor its ‘Borders Bucks’ that membersuse for purchases. These will expire on July 31.

Borders has done the gift card industry a favor by continuing tohonor the cards. While Borders no doubt had to obtain permissionfrom the courts to do so, by asking for it, the company staved offa round of consumer panic about gift cards. It may have also helpedprevent future regulation on gift cards that would require cardfunds to be held in trust until they are spent. On top of all ofthat, a battle over Borders gift cards would likely have led tomore state laws, which take precedence under the CARD Act.

Honoring gift cards in a liquidation is good business sense in thatclear evidence exists that shows shoppers spend more than the facevalue when they redeem gift cards. Based on the publicly availabledata, the numbers show that using a base of all gift cards,consumers tend to spend about a third more than the face value ofthe card. However, some retailers have said privately that thenumber is much higher because the cards used for things likereturns and store credits have been factored into some upliftcalculations.

The Borders bankruptcy also leaves clues to future shopping trendsand thus gift card sales. These trends are important to bothretailers and distributors of gift cards. The end of Bordersreflects societal trends: reasons for the bankruptcy given invarious analyses include losing market share to Amazon.com, Bordersoutsourcing its website operations to Amazon, and a reduced demandby the public for books.

In a survey of convenience store owners conducted by Mercator inconjunction with CSP Magazine, operators reported thatsales of gift cards for book stores declined 10 percent from 2009to 2010. Meanwhile online music and video cards grew by 34 percent,sales for gift cards for online retailers grew by 111 percent, andinternet game card sales grew by 112 percent.

As consumers change their behavior and the ways that they interactwith the world, their payments choices and behaviors will reflectthose choices. Providers will be forced to adapt and read the tealeave to know what the future holds and where best to allocateresources in places like card malls and incentive programs.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: DebitMerchant AcquiringMobile PaymentsPrepaidSelf Service and ConvenienceSocial Media

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    embedded lending

    Embedded Lending as a Growth Strategy for ISVs—How to Maximize Revenue Potential

    June 18, 2025
    merchant ai

    Merchants Find More Use Cases for AI Amid Risks

    June 17, 2025
    prepaid payroll

    Taking the Check Out of Paycheck: The Role of Prepaid in Payroll

    June 16, 2025
    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025
    agentic commerce

    The Agentic Advent: How the Next Iteration of AI is Shaping Commerce

    June 6, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result