As retailers begin to execute year-end strategies with expectations of ringing up robust sales this holiday season, many are tapping on-demand channels to bolster bottom lines. No longer restricted to physical kiosks for selling prepaid gift cards, larger merchants with online presences are going virtual with their open- and closed-loop card campaigns.
While many prepaid card providers continue to focus on producing millions of cards with few designs, Chicago-based Arroweye Solutions offers a slightly different approach. The company, which specializes in customized gift, incentive and payment cards, is leveraging its on-demand technology to allow merchants and customers to personally brand the prepaid gift card experience.
"We provide the e-commerce technology and fulfillment," said Render Dahiya, Arroweye President and Chief Executive Officer. "We do it in a digital fashion, so there's a physical card being sent out where we use digital printing techniques. We have a fulfillment center in Nevada where we create the gift card, create the greeting card, put them together, put them in a nice envelope and send it to the recipient."
Instead of requiring merchants to order 100,000 gift cards in one static design, Arroweye offers diversity and variety. Dahiya said a customer who visits Macys.com, for example, can place a personal photo on the gift card, select an image from Arroweye's library of greeting card images, add a personal message and have it ship the next day. For last-minute shoppers, the e-delivery option allows e-certificates to be downloaded by recipients, he said.
Arroweye adds physical greeting cards to the package because 50 percent of consumers buy greeting cards after purchasing gift cards, according to Dahiya.
Dahiya said gift card users tend to retain personally branded gift cards longer than generic cards, meaning fewer personalized cards are discarded, thus increasing the likelihood of reloads. "I've heard of people using our gift cards, where they've uploaded their grandchildren's photo on it, and they've refused to ever give it away," he noted. "Adding customization or the ability to have a lot of designs makes it very relatable. It makes people keep them in their wallet."
Other benefits to merchants involve the increased revenues generated by higher load amounts on Arroweye cards, as well as additional spend beyond what's on the cards. "The consumers who choose our product put 20 percent more dollars on the gift card than the consumers who use a standard gift card," Dahiya said. Furthermore, customers who use Arroweye spend on average between 15 to 20 percent over the value on cards, which makes retailers less focused on making money off the card itself and more on the additional revenue in products sold, he added.
Dahiya said smaller retailers have yet to adopt the Arroweye platform in substantial numbers, but the platform can be a key differentiator for midsized regional retailers and large national brands. "They're getting enough pop off of their e-commerce site to make this worthwhile," he said.
Testing of the merchant acquiring waters is underway at Arroweye, as the company recently struck a deal with an unnamed merchant acquirer. "If the client chooses to buy a gift card as part of what's being processed through them, the client can get co-branded gift cards that have their full color brand on them through us," Dahiya said. "This is the first time we've tried this, and so far we've seen really good rates of success with it."
For sales agents, Dahiya pointed to three notable prepaid gift card trends to watch this holiday season. First, retailers are ordering large volumes of gift cards, so expect to see a tremendous marketing push for gift card usage. Second, bounce-back programs are gaining in popularity. "We've had very successful restaurants say, 'Hey, if you order $100 worth of gift cards, we'll send you a $25 gift card for free,'" Dahiya said. And, finally, retailers are beginning to integrate e-gift cards into their programs.
Thus, the 2011 holiday season seems poised once again to be prime time for gift cards, both virtual and plastic. 
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.
Prev Next
