Gift cards have become one of America’s great impulse and last-minute buys. So it’s no surprise that almost anywhere consumers go—gas stations, supermarkets, drugstores—they run into racks of them.
Because it’s so easy for consumers to find gift cards, you might think credit unions don’t really have a place to put a dog in this fight.
But you’d be surprised: Many credit unions are cashing in on gift cards by taking advantage of offerings and insights from credit union-oriented vendors.
“Gift cards are a basic part of society’s fabric now,” says John Dwyer, regional sales manager at CPI Card Group.
He says there are two main types of cards:
• Open loop, which can be used anywhere, like a debit card; and
• Closed loop, which can only be used at the issuing retailer.
While open loop is the category where credit unions can compete, for the most part “they’re less a revenue generator than a convenience for members, and another way to get members physically into a branch,” says Jeff Falk, director of product development at The Members Group. “Our model prefers that approach—getting the member to come in to buy a card—rather than having them go to a website, select a card and amount, and then wait for the card to arrive.”
Who buys gift cards? For the most part, Falk says, people pressed for time.
“Five years ago the uptick on gift card sales would start on Black Friday, when we’d see a huge spike,” he says. “Now that consumers realize the cards are always available, we’re seeing a more gradual spike after Thanksgiving as they put off buying them until much closer to Christmas. They may literally be driving to Grandma’s house for holiday dinner and pick up some cards along the way.”
Next: What vendors offer