Retailers more willing to help you get your gift card value

We recently reported on Plastic Jungle’s integration with First Data’s electronic gift card network, allowing them to handle some gift cards electronically, saving customers the trouble of completing transactions by mail.

Here is what First Data has to say about working with Plastic Jungle:

But now there are sites that can provide a trusted environment for consumers to sell cards they don’t want and buy cards they do want at a discount. Merchants benefit as well, because when consumers purchase gift cards they want and will use, there is an increase in store foot traffic and a reduction in outstanding liability and escheatment concerns.

For those not familiar, escheatment is the process of turning unclaimed or abandoned property to a state authority.

What they are telling us here is subtle, but important and could signal a significant change in the retailing industry’s perspective on gift cards.

For many years, gift cards have been win/win for retailers, meaning they win twice.  When a customer comes in to spend a gift card, they often spend more than the face value of gift cards.  Retailers also had the added benefit of breakage, where as much as 10% of face value of gift cards went unspent and retailers got to keep this money as profit.

However, in recent years more and more states got hip to breakage and started demanding the retailers turn over breakage to their unclaimed property coffers, presumably under the guise of making this property easier to reunite with its lost owners.  But it was no great secret that the majority of this unclaimed gift card money would go straight to states’ general fund as it is notoriously hard to reunite with its rightful owner, meaning the customer that either forgot about, lost, or had a really hard time spending the full amount of their gift card.  This has turned retailers win/win for gift cards into a win/lose.

Well, that little statement buried in First Data’s press release signals an attempt by retailers to turn their win/lose back into a solid win.  You see, by acknowledging that they no longer benefit from breakage, and trying to make it easier for customers to redeem the full value of their gift cards, or allowing someone else to benefit from an unwanted gift card, they benefit more than the unused gift card $$$ going to the state, as they get to claim that gift card money as sales and stand to benefit from the additional sales that gift card redemption typically brings.

This is a good thing for consumers.