How to protect your reward scheme from the risk of retailer collapse
Gift cards and vouchers aren’t normally something which get airtime in the Houses of Parliament, but this month they were at the centre of a full-blown debate around the nature and extent to which new regulation is needed.
This is, of course, all part of the continuing fall-out from the collapse of the high street retailers HMV and Comet which left voucher and gift card holders swinging in the wind.
There is no doubt that the problem of retailers failing to honour gift vouchers and cards is one which is damaging. For recipients, it casts into doubt their value and for those who give them it creates problems of credibility.
With gift cards and vouchers playing an increasingly important role in business-to-business marketing and employee reward, organisations need to think hard about how they can protect themselves.
Fortunately, this is an instance where we don’t have to wait for the slow wheels of government legislation to grind out a solution: there are already ways of making sure that money invested in cards and vouchers can be redeemed.
For those who use retail vouchers, the answer lies in moving away from single store schemes to ones which are part of a network. This makes sense not only because multi-retailer gift vouchers mean you aren’t reliant on the health of a single retailer but also because you give the recipient the choice of where they redeem the voucher.
The second line of protection comes for those who use pre-paid cards. Here there is specific protection in place which means the funds loaded onto the card are held in trust, not by a single retailer. That means the recipient has access to the money for the period of the card validity. That means multi-retailer pre-paid cards can give full reassurance that recipient won’t end up out of pocket.
While many users of single store vouchers may never face the problems resulting from the collapse of a retailer, awareness of the risks and how to protect yourself and your recipients is key.
Author: Colin Hodgson
| Category: Blog
| 30/07/2013 |