7 Key Aspects of Your Global Gift Card Program
By Tim Pechmann, Co-Founder and COO
As brands continue to expand globally, gift cards have become a crucial aspect of their payment and customer acquisition strategy. However, before expanding global gift card programs, there are certain aspects that brands should keep in mind.
One of the primary considerations when expanding global gift card programs is purchase behavior in each market for gift cards. In many markets, gift cards for gift giving remain the primary use case. This provides the opportunity to leverage gift cards for brand building and incremental revenue. In many rapidly growing markets, however, such as Latin American countries, gift cards represent a strategic payment vehicle. Consumers purchasing gift cards for self-use creates a tremendous opportunity to solve payment challenges for a brand and drive customer acquisition. For example, according to the GCVA, self-use now represents 21.8% of consumer gift card spend in the UK – worth over £1 billion.
Global Gift Card Formats
Another consideration when expanding global gift card programs is the format of the card. While physical gift cards may be more popular in some regions, digital gift cards may be the preferred option for consumers in others. Beyond traditional formats, your brand may need to consider alternative forms of distribution, such as Pin-on-Receipt (PoR) networks, mobile wallets, and loyalty apps. The most prominent markets for PoR include LatAm, SEA, Japan, Southern Europe, the Middle East, and South Africa. It’s important to understand the different formats preferred in the target region and the impact each format has on your program’s economics and marketing efforts.
Tax and regulatory considerations are crucial when expanding gift cards globally. Brands need to ensure they comply with local tax regulations and reporting requirements. In some countries, there may be restrictions on the value of gift cards or the expiry date, which must be adhered to. In other markets, Money Transmitter Licenses (MTLs), KYC, and AML requirements may apply. Understanding these in advance is key to successfully creating and implementing a global expansion strategy that makes sense for your brand.
Different regions may have different rules and regulations around escheatment and breakage, and it’s essential to understand them when expanding your global gift card program. Escheatment and breakage refer to the legal requirements around unclaimed gift cards and the amount of money that remains unused on gift cards. Failure to comply with local laws may result in significant financial liabilities for your brand.
Brands need to understand the local currency and remittance restrictions associated with revenue generated in each country. Many markets make it easy to sell a gift card in one country and remit the proceeds to your native country. In other markets, like Brazil, Japan, and Egypt, more restrictions on currency movement may apply. Remitting proceeds out of a country after a sale may result in additional withholdings depending on the status of local entities and tax laws. It’s essential to work with payment providers and local partners who understand these restrictions and can help facilitate transactions.
Global Gift Card Reporting/Analysis
Reporting is crucial when expanding your global gift card program. Your brand needs to monitor key performance metrics, such as sales by format in each country, and apply redemption data to determine the true ROI for the program. For example, knowing which channels are solving a payment challenge for consumers and driving the newest users for your brand is key to optimizing the program. By understanding consumer preferences, your brand can adjust its gift card strategy within a country accordingly.
Global Gift Card Distribution Partners / Lead-Times
Different regions may have different lead times for the various elements of a gift card program (card production timing, launch cycles, in-store marketing dates, etc.). It’s important to factor each of these into your expansion strategy. For example, does your brand need to source local printers to hit the production quality required? Do you need to build in longer lead times to ensure inventory reaches stores when retailers need them? Are there holiday or other sales spikes unique to that country that must be considered? It’s essential to work with local distribution partners who understand the local market and consumer preferences to set your brand up for international success.
TDS Gift Cards is at the forefront of international expansion in the gift card industry, boasting a gift card network spanning 40+ countries and over 1.2 million retail locations. Want to learn more from the experts? Reach out Info@TDSGiftCards.com to get connected today.
Tim Pechmann is the Co-Founder and COO of TDS Gift Cards. Focused on corporate development, client success and leading TDS global distribution teams. Tim leverages 20+ years of retail and gift card experience to help clients develop global prepaid strategies that drive brand awareness, customer acquisition and revenue.