The Benefits of Retail Gift Cards: A Guide for Retailers

Retail gift cards can be a powerful marketing and sales tool for retailers. And when you combine them with point of sale technology, their potential is even greater.

But how exactly do retail gift cards work, and what are their associated challenges? That’s what this guide is all about. We’ll talk through the various types of POS gift cards, discuss the benefits of retail gift cards to retailers, and then dive into the different challenges you may need to face when rolling out a POS gift card program.

In the end, you’ll have all the information you need to decide whether a retail gift card system is right for your business. Let’s get started!

An Overview of Gift Cards and How They Benefit Retailers

Gift cards have become essential tools for retailers looking to boost their sales. More and more shoppers are using retail gift cards to make purchases, especially surrounding the holidays. But there’s more to gift cards than just being a convenient way for customers to buy gifts.

When it comes to retail gift cards, retailers can benefit in several ways. Gift cards can be used as a marketing tool allowing you to create special offers or discounts that incentivize customers to come back and shop with you again. They also offer complete control over how much money is loaded onto each card, as well as when they expire. And since reporting on gift card transactions is so straightforward, retailers have the data they need at their fingertips to understand their customers and make smart decisions about their business.

Retail gift cards can also help increase cash flow and grow your bottom line by providing an easy way for customers to make payments without worrying about carrying cash or checks around in their wallets. Plus, when customers use gift cards rather than cash or credit cards, it’s often cheaper for merchants to process fees. Ultimately, this means that retailers experience more profits from each sale!

Challenges of Implementing Retail Gift Cards

As with any technology, there are always challenges when implementing a new system. With retail POS gift cards, there are a few key considerations to consider before you start.

First, there is the cost: A sound POS system requires an initial investment of equipment ranging from hundreds to thousands of dollars. In addition, you’ll have to pay for programming and maintenance costs on an ongoing basis.

Then there’s the time commitment: You can expect to spend time training your staff on the new retail POS gift card system, as well as time troubleshooting any issues that may arise with it.

Finally, you’ll need to consider security: With the rise of fraud and credit card hacking incidents in recent years, ensuring your customers’ data is consistently secure is necessary. Take steps like encrypting transactions and regularly inspecting your systems for vulnerabilities to ensure your customers’ safety and trust.

Overall, these points suggest that implementing retail gift cards takes some planning and forethought—but if done right, they may be well worth the effort in return.

Note: One major problem that prevents some retail businesses from using gift cards are the costs associated with using them. Most POS systems integrated with a specific processor require you to use their gift card module. As a result, they charge you money per gift card you use. They sometimes cost companies 2-5% for each one, on top of processing fees. With KORONA POS, you never pay additional fees for using gift cards. Our module is integrated and included in all of our subscriptions.
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Leveraging Data From POS Retail Gift Card Transactions

Using gift cards at the point of sale rather than simply as a payment method can be an excellent opportunity for retailers. Besides becoming a popular payment trend, one of the benefits of retail gift cards is that they provide valuable data that retailers can use to track and analyze customer behavior, predetermine promotion strategies, and tailor marketing campaigns.

Analyzing Purchase Patterns

Retailers can benefit from gift cards by leveraging POS gift card transactions to gain insight into customers’ buying habits. This data can help them identify seasonal trends, popular product categories, and other valuable patterns related to their customers’ purchases. This information can then forecast future sales and help businesses make more informed decisions about inventory, store layout, promotions, and more.

Creating Loyalty Programs

Retailers can also leverage gift card data to create loyalty programs to reward frequent shoppers or encourage purchases during slower periods. By tracking how often customers use their gift cards, retailers can offer discounts or rewards to promote loyalty—for instance, offering a discount on a customer’s next purchase after they’ve used the gift card several times within a certain period of time.

Analyzing POS gift card data is an effective way for retailers to draw insights from customer preferences that would otherwise be difficult to obtain from consumers. By taking advantage of this data, retailers can gain valuable perspective into how their customers shop and ultimately increase customer loyalty and overall sales.

Using Retail Gift Cards as a Loyalty Program

The other significant advantage of retail gift cards is that they can also double as a loyalty program. It’s no secret that customer loyalty is crucial to any brand’s success, and a loyalty program can be a great way to reward customers for their repeat business.

Giving out gift cards at key milestones—such as the first time they reach a certain spending level or when they have purchased from you multiple times—can not only help you retain customers but also encourage them to spend more.

Plus, with POS-based gift cards, you’ll have complete visibility over your customers’ spending habits and preferences. This will allow you to learn more about your customers and tailor your loyalty program to meet their needs precisely.

It’s easy to get started with a POS-based retail gift card program:

  1. Research the different types of rewards that customers like receiving. This could range from product discounts to exclusive offers or early access to new releases.
  2. Set up your rules for rewarding loyal customers, such as the number of purchases necessary before getting rewarded or what qualifies them for rewards (such as reaching an amount spent or buying specific products or items).
  3. Use POS software to track customer purchases and send out personalized thank-you emails with promotional codes after each purchase or when they reach a particular milestone in their loyalty program journey.
  4. Monitor the results continuously and tweak rules if necessary to keep your customers engaged and incentivized.

Using POS-based gift cards can be an incredibly effective way of boosting customer retention and engagement while giving customers something tangible in return for

Security Concerns With POS-Based Retail Gift Cards

You might be worried about retail gift card security, which is understandable. No one wants to deal with fraudulent activity or customers trying to abuse their gift cards. Fortunately, you can take measures to protect yourself and your customers.

Here are some of the most important things you need to do to make sure that your POS gift cards remain secure:

  1. Install security software – Your POS system should include tools like anti-malware and antivirus programs that help protect it from potential threats.
  2. Require customer authentication – When a customer purchases with their gift card, require them to provide some form of identification or authentication to validate the purchase. This could be something as simple as a phone number or email address.
  3. Monitor for suspicious activities – You should constantly monitor your system for any unusual activity (such as multiple purchases) so that you can flag and investigate if necessary.
  4. Limit the amount of money loaded on each card – Limiting how much money can be loaded onto each card helps prevent theft and fraud since criminals aren’t likely to want to spend a lot of time trying to break into a small-value card account.
  5. Use encryption technology – If you process your credit card payments online, you must use secure encryption technologies such as SSL encryption to keep customer data safe from hackers and other criminals.
  6. Implement chip technology – Adding chip technology to your cards makes them much more complicated for criminals to clone and counterfeit, further enhancing their overall security.

Managing Inventory With POS Gift Cards

You might wonder how point of sale gift cards can help you manage your inventory. Well, the answer is simple—they make it easier to keep track of the products that customers buy, allowing you to plan ahead when ordering more inventory.

Track what sells best

With your POS system, you can easily see what products customers purchase most and order more. This also helps you better understand your customer base’s buying habits and enables you to create targeted promotions for them.

Optimize your stock levels

The right POS can also streamline the ordering process by automatically reordering stock when levels run low. This eliminates manual tracking and lets you keep your shelves stocked with the products your customers want.

Using a retail point of sale can benefit retailers in other ways, too:

  1. Monitor customer spending habits and preferences
  2. Generate more revenue by offering extra services or discounts
  3. Increased security over the physical handling of cash
  4. Improved customer loyalty through tailored promotions or rewards programs


In conclusion, the benefits of retail gift cards are an excellent way for retailers to provide their customers with a convenient and easy way to pay for goods and services. It drives revenue and customer loyalty while still being cost-efficient. By properly understanding the challenges associated with POS-based retail gift cards, retailers can have confidence in implementing them successfully.

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Written By

Mahougnon Martial Amoussou

Passionate about SEO and Content Marketing. Martial also writes about retail trends and tips for KORONA POS. He loves NBA games and is a big fan of the Golden State Warriors.