The Gift That Keeps On ....

I have a draw full of gift cards that I appreciated getting and mostly used to great effect at bookstores to online retailers. Why am I holding onto the cards, because they all have varying amounts left on them that didn't quite get spent. From $3.50 to $8.20 it probably amounts to a worthwhile spend if only I could consolidate the revenue into one card. Of course that isn't possible and is not an agenda item for the gift card providers because they make most of their money on the "breakage", ie the bits left on the card that never get spent and eventually expire and fall back into the hands of the financial institutions behind the card providers.

In the US there are literally thousands of gift cards available for fast food outlets, retail stores, online players to fashion and music houses. It is now estimated to be a $100 billion industry with a very particular concern as the industry continues to grow. That concern revolves around the "breakage" issue but also around the not spending the card at all issue and letting them expire. Nearly $5 billion of cards goes unclaimed every year by people just not spending them because they are for brands or merchandise they are not interested in accumulating or consuming.

Pottery Barn, Applebees, Ikea and others end up unspent because their product may not appeal to the recipient or worse still, like a $25 gift card for Southwest Airlines, will never get spent if the impetus to travel is not there or the feeling that the amount is too small to motive the cardholder to spend even more on an airfare. So nearly 10% of gift cards end up back in the hands of the providers for doing nothing but producing a small piece of plastic. It almost feels like a scam.

In Australia it is a relatively new trend but if you go into Coles or Woolies the end of one of their aisles has at least a 100 gift cards of assorted varieties hanging there, tempting your Aunt or Uncle who don't understand what you really want for your Birthday. So aside from the relatives and acquaintances who don't really know you, the gift card industry targets the mindset of a quick resolution to an age old problem of what to get people on short notice or what fits into a card without having to buy wrapping paper.

What is really lacking in Australia are companies such as Cardpool, Plastic Jungle and Gift Card Rescue who have the capacity to buy back unwanted and unused gift cards within a buy and sell platform for consumers. It won't take long for large amounts of money to go unspent in Australia when it comes to gift cards and before we classify the system "broken" as in the US there is an opportunity for someone simplifying this financial system.

So before you consider giving that piece of plastic with all the thought behind it, consider where that card might end up, in the draw or in the bin. Either way you end up buying a Birthday present for the financial institutions.