| In the past, only large retailers had gift card programs. | | | | customer buys the DVD's and never uses the gift |
| A gift card is a card, similar in appearance to a credit | | | | card again, loses it, etc. Now, not only did the business |
| card, that can be purchased by a customer from a | | | | make profit from the $82.00 retail price on the DVD's, |
| business, for a set amount of money, and used at a | | | | they have an extra $18.00 in pure profit from the |
| later date as a payment method at that business. | | | | un-used gift card funds. Another scenario the |
| They are called gift cards because, primarily, they are | | | | customer buys $114.00 worth of DVD's, uses the entire |
| purchased by a customer and given as a gift to | | | | gift card balance and pays and additional $14.00. |
| another person. They are reminiscent of gift | | | | Although, not as profitable as the first scenario, good |
| certificates that were used before sophisticated | | | | nonetheless. |
| electronic point of sale systems became inexpensive | | | | Gift cards increase the customer base of a business. |
| enough for small businesses to own. They provide | | | | When a card is purchased, it is usually purchased for |
| instant revenue to a business with no immediate | | | | that purpose: to be given as a gift. Logically, someone |
| movement of inventory or procurement of a service. | | | | who enjoys being a customer of a particular business, |
| They also, by the very method in which they are given | | | | who wants to share it with a friend, relative, family |
| as gifts, work to increase ones customer base. | | | | member, or coworker could purchase one as a means |
| Gift cards provide instant revenue to a business. | | | | of recommending that person to the business. Think of |
| Thinking of it in accounting terms, when a customer | | | | the reasons that you, the reader, have purchased |
| purchases a card, the company's cash account is | | | | them for people in the past. Maybe you know that |
| credited for the amount of the card. There is no | | | | your dad loves action movies, but you aren't sure |
| immediate debit from any asset account. There is also | | | | exactly which ones he has seen, and you don't want |
| no immediate service offered requiring labor hours. | | | | to call and ask because then he might get tipped off |
| When the card eventually, if ever, makes it back into | | | | about your gift. Perfect! Buy a gift card, and let him |
| the business for use as a payment method, at that | | | | choose exactly what he wants. Everyone reading this |
| time an asset is debited for inventory, service, etc. | | | | article has most likely participated in a similar scenario. It |
| However, if, for example, the card was purchased for | | | | are these two main points thats make this method of |
| $100.00 and the customer purchases a few DVD's | | | | marketing an essential tool for expanding revenues |
| and the total comes out to $82.00. In one scenario, the | | | | and increase the customer base of any business. |