Everything you need to know about gift card processors
Today, an increasing number of brands run their gift card program, either digital, physical, or both. This service allows customers to gift a brand voucher, or for third-party retailers to expand their product range.
A thriving market that hides, however, many different players behind the scenes. In this article, we will focus on processors.
What is a gift card processor?
A gift card processor is used to create and issue codes and allow brands to activate, send, and debit these codes.
A gift card is a unique code attached to a chosen amount. Therefore, without a processor, the gift card cannot exist.
Fortunately, several processors offer more or less flexible and secure solutions on the market. Each with its way of creating codes, managing deliveries, integrating with payment/checkout software, and spending (or redeeming) the codes. All these elements must be considered depending on the needs.
How to choose the right processor?
The gift card processor is the starting point, before the creation of the gift card. Therefore, it is essential to choose the right processor before launching your gift card program. Especially since this will be a long-term partnership.
Here are a few guidelines to help you choose the best one for you:
Security and encryption
Gift cards are a payment method, and like many other payment products, they are targeted by fraudsters. To protect the card, the code must be encrypted, and the issuing, sending, and spending process must be highly sophisticated. It is important to have several verification steps, and if necessary, the option to quickly deactivate the codes.
Let’s take a real-life example. When delivering physical gift cards to a store, it is important to ensure that the codes are inactive (i.e. unusable) in case the cards are lost or stolen.
Code generation
Can we issue codes on the go, i.e. when needed? Or, on the contrary, can we issue a large number of codes to be sent to an external service provider such as a professional printer? Being able to choose how codes are issued will help brands adapt to any situation.
Code Activation
Is code activation in real-time? Is it done by the processor or by the brand?
Integration to redeem gift cards
To redeem gift cards, you must know how the processor connects with the checkout software or the payment gateway of your e-commerce website. Does it support top-up payments, i.e. to pay with another method if the cart exceeds the amount of the gift card?
API based
An API-based processor is a major advantage for a gift card program. First, the gift card can be attached to a free amount to the nearest euro (52€ for example). It can be split (spent several times). There will be no stock-outs (just-in-time), and card activation can be done in real-time. Automation will be essential.
And last but not least: the API is a strategic element for the B2B aspects of a gift card program. It will have a direct impact on the acceptance rate of third-party distributors or resellers. Indeed, the latter have a strong preference for APIs in their integrations.
A proactive team
The code is the centerpiece of the gift card. Therefore, in the event of a problem with codes, a cancellation request, or other, it is essential to be in contact with a responsive customer service team on the processor’s side: respond in the shortest possible time, providing the appropriate answer, etc. Especially when fraud is involved.
A comprehensive back office
When managing codes, it is best to have access to a comprehensive back office. Ideally, you should be able to manage as many operations as possible in-house, to avoid delays with the processor’s customer service department.
Essential data
The processor will have essential data to assess the performance of your gift card service: additional payment (in addition to the amount of the gift card), the time between the purchase and the use of the gift card, the total amount of expired gift cards, etc. From the outset, it is advisable to have access to this information to better manage the service later on.
Collaboration with external parties
Is the processor open to working with external parties? Are there any barriers to entry? For a gift card program to be successful, it is essential to create a cohesive relationship between different players (processors, platform providers, printers, aggregators). These players need to work together to enhance the brand’s program.
The processor, as well as the other players involved in a brand’s gift card program, must be chosen carefully. First and foremost, you need to identify your needs, review your technical stack and define your objectives before getting started.
