A number of venues have received an unpleasant surprise in recent weeks with the popular Westfield XS eftpos gift card attracting unexpected additional fees.

It is understood that some clubs are facing an increase in gift card fees of up to $50,000 per annum with the new charges.

Purchases of cards below a total transaction of $10,000 will now attract a fee of $4.95 per card, regardless of its value.  Single purchases over $10,000 will have a $2.50 fee per card, again regardless of the single card amount.

Many clubs use 200-300 these gift cards each week for their bingo, raffle and promotional prizes, as well as incorporating them into their rewards program. And many of these cards are low denomination cards of $10 and $20 value.

This raises the question of the real cost of gift cards and whether they actually assist in creating loyalty?

We know venues need a means to make members points more valuable.

Any club, no matter how big, simply doesn’t have the range of services and facilities available to make internal points use alone valuable enough as an incentive for members to keep coming and spending at their club.  Especially for those VIP members who can accumulate high points totals.

When a member purchases a gift card with their points, it is a disposable product.  They use it and it is gone, often with an unused balance.  Once the transaction is completed, it is over – there is no return incentive attached to that card for that member.  After all, they can purchase gift cards at a lot, if not most, clubs, so there is nothing unique to tie them to a single venue.

It’s hard to see how a Bunnings Card or even a Westfield branded eftpos card with a specified dollar amount, ties a member to a particular venue, especially on a long term basis.

And if you are going properly cost the use of gift cards, apart from these additional fees per card, you need to also include: delivery costs, management/staff handling costs (ordering, logging, counting etc.), expired cards and lost or stolen cards.  The real cost of maintaining a rewards system tied to gift cards can be a lot higher than it might appear.

There is an alternative option with reloadable eftpos cards that allow members to transfer their rewards and promotional points to a dollar balance, but some clubs have resisted this product in the past due to the perceived additional costs.

However, if the gift card system is properly costed, a reloadable card option may be a far more viable and effective alternative.

A reloadable eftpos debit card also comes with a far higher level of loyalty attached as they become continuous, daily-use debit cards, just like a member’s bank cards.  If a cash balance is left on that card, it is not lost and doesn’t expire and there is far more incentive to return to that particular venue to “top up” their spending cash.

There’s also additional benefits of branding, security and the opportunity to gather valuable data on members spend and behaviour outside of the club.

If you think it is time to review your gift card spend and look for a more powerful, measurable and loyalty focused system, contact Danielle Rayner at GSL Solutions on 02 8090 6533, .