By Jeff Falk, director of product development for TMG
There's been much ado about retail store closings and how that will affect gift card givers and recipients this holiday season. As such, educating CU members about the differences between "closed system" and "open loop" gift cards has never been more important.
Keep it simple by focusing on these three benefits of open loop cards:
1. Because open-loop cards are not associated with a particular store, as closed system cards are, they carry less of the risk associated with retail closings and bankruptcies.
2. Open-loop cards carry the Visa or MasterCard logo and can be used almost anywhere the branded cards are accepted. This gives the cardholder the flexibility to shop with more than one retailer.
3. Fraud is less of a concern with open-loop cards because the balance is insured, a protection not typically offered to closed system cardholders.
While the main message remains important beyond the holidays, getting the message out now is key. Here are a few tactical ideas for how to do this:
- Educate tellers on the difference between closed-system and open-loop cards so they can have an intelligent discussion with skeptical members.
- Explain the differences on your Web site, on your blog or via an e-mail campaign.
- If your local media is covering the gift card controversy, but failing to discuss the open-loop card as an option, send a letter to the editor explaining what they missed.
- Get creative in your branch. Post flyers saying things like "Don't Fear the Gift Card" or "Gift Cards Minus the Risk."
Current research indicates consumers are still interested in giving gift cards in the 2008 holiday season. It's up to us to show them how they can do it economically, conveniently and--most importantly--safely.
