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Gift and Loyalty Smart Card Technology Ensures Customer Loyalty

Beyond offering great customer service, what can merchants do to make more sales and keep customers coming back? The notion of customer loyalty seems almost quaint today, when shoppers openly defect to competitors that offer lower prices. But the good news for merchants is that shrewd shoppers also value flexibility, convenience and security. And a simple way for merchants to de-emphasize price - and attract more business - is to offer customers other incentives to shop, such as a wider range of payment options or the ability to earn loyalty card rewards. Thanks to smarter payment technology and changes in consumer attitudes, electronic payments have become more prevalent than ever. MasterCard International, one of the world's largest credit card networks, reports that its branded cards were used in more than 11.6 billion transactions in 2001, generating a gross dollar volume of $986 billion. This almost trillion dollar volume is up 17.6% from 2000.

It's no mystery why the number of e-payments is growing. Consumers love credit cards because they are easy to use, offer increased buying power and are safer to carry than cash. Debit cards offer shoppers another fast, secure way to pay. And electronic checks - secure transactions that verify the availability of funds and automatically transfer money - represent a third, increasingly popular alternative to cash.

For storeowners, accepting these electronic payments has never been easier. Merchant accounts can be approved in as little as 24 hours. And payment solutions exist for virtually every type of business, from restaurants to online retailers, mobile merchants to home-based enterprises. Best of all, business owners don't have to pay up front for terminals, printers or software, because most payment providers offer short and long - term equipment leases. Merchants who offer more payments options to their customers enjoy many advantages, including:

Access to a wider customer base

Higher frequency of sales

Larger ticket amounts per sale

Increased customer traffic

Augmented revenue from customer impulse buys

Strengthened credibility

Lower incidences of employee theft

In addition to credit, debit and e-check acceptance, businesses are using gift and loyalty cards to attract and keep customers. Research shows their efforts pay off. In a national survey on plastic card usage, 45% of respondents said they spent more money at stores where they were loyalty program members.

The same study revealed that gift cards, like loyalty cards, help merchants increase store traffic and boost incremental sales. Approximately 55% of survey respondents who have received gift cards reported that they needed more than one trip to deplete the value stored on their cards. In addition, the majority of return shoppers said they spent more than their cards' initial value. Not surprisingly, many businesses that once offered gift certificates have traded in paper for plastic.

Card Marketing magazine estimates that by 2005, plastic cards will represent 80% of the gift certificate market, a total of about 850 million cards. The advantages plastic cards offer merchants are undeniable. For one, retailers no longer have to refund cash for unspent balances. To storeowners, this means more positive cash flow and repeat business. Plastic cards are also great advertising tools because they are brandable, durable and are easily carried by shoppers. Equally important, the cards are much more difficult to forge than paper gift certificates. And that's just the beginning.

A business owner can also use the information encoded on a gift card's magnetic stripe to determine where and when the card was purchased, where and when it was used, and what the card recipient bought. In addition to these benefits, loyalty cards offer merchants even more options, including the ability to:

Track customer behavior and history

Allow cardholders to earn points toward rewards

Overcome slow sales by offering extra points on purchases made during off-peak seasons

Encourage customers to spend more by offering bonus points for purchases over certain amounts

Create special promotions, such as members- only discounts

Allow customers to apply their points toward future purchases or to redeem points for free branded merchandise

The list of benefits grows as payment technology gets both smarter and more economical. But the bottom line remains the same: One of the best ways to attract new business while maintaining existing customers is to offer shoppers more ways to pay for goods and services. Payment flexibility helps clinch sales and encourages new customers to return.

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