The Retail Gift Card Association (RGCA) formed in 2008 to promote understanding and use of closed-loop gift cards and establish best practices. It now has 50 members. RGCA's executive director Rebekka Rea discusses the association's work opposing potentially harmful legislation. Fraud is a top concern for members, and RGCA aims to research the actual size of the closed-loop gift card industry and help members grow sales. Mobile gift cards and e-gifting are seen as important future areas, but physical cards remain strong through major retailers' creative displays and promotions.

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12.05.11
Q&A with Rebekka Rea, RGCA (Fall 2011)
Fall 2011
The Retail Gift Card Association (RGCA) formed at the end of 2008 to promote the understanding and use of closed-loop gift cards and to
establish best practices that benefit industry and consumers. Although its start coincided with the recession and some of the lowest gift card
holiday sales in recent memory, the past three years have proved productive, with the association reaching 50 members. It’s also been busy as
the nonprofit seeks to expand its member resources for lobbying against potentially crippling legislation and investing in research to inform
strategies and growth. Paybefore sat down with RGCA’s executive director Rebekka Rea to check in on the association’s progress and what its members
are focusing on for the future.
Paybefore: What’s been keeping you busiest this year? Legislation like we saw in New Jersey last year?
Rebekka Rea: We’ve had a little bit of a reprieve since the arguments in the New Jersey case are being heard. We’re supporting the parties
involved [New Jersey Retail Merchants Association, New Jersey Food Council and American Express Prepaid Card Management Corp]. We want
them to fight to completely repeal this law.
Oregon had a bill that wanted to make every retail gift card reloadable. Thankfully, it didn’t pass, but it demonstrates that there’s still a lack of
understanding at least at the state level. So, we’re keeping tabs on all the different legislation.
We created a government relations coalition within the RGCA, which now provides our membership with a government relations
representative to work on their behalf. In addition, we’re working even more closely together in identifying some best practices for terms and
conditions. One of our goals is to continue our association outreach to those with common interests like the National Restaurant Association,
the Incentive Gift Card Council (IGCC) as well as some of the state associations. We want to strengthen awareness on the state level and be a
resource to others.
Paybefore: In addition to changing laws, what are your members concerned about?
RR: Fraud is definitely at the top of the list. There are several different scams going on. One involves fraudulent checks and bogus
companies ordering large quantities of gift cards. The check doesn’t go through, but the cards have already been sent. Even though most
retailers can deactivate loads on the cards once this is discovered, some get through and are used. The Secret Service has gotten involved
and formed a task force around this particular scam. It has affected many national retailers.
Paybefore: What is a key priority for you in the next year?
RR: We want to be a well-rounded group that’s focused on the government and lobbying side as well as on commissioning research that’s
going to help members grow their programs. We are working hard to fill the knowledge gap. There’s not a true number of how big the
closed-loop industry is. There are a lot of guestimates and aggregates of information from processors or retailers, but some retailers issue
gift cards for store credit. Do those really count as gift card sales? So, we’re working with Mercator Advisory Group and the IGCC to develop
some research that will identify the actual size of our industry and help formulate better plans on how to grow within particular channels.
Q&A
with
Rebekka
Rea,
RGCA
(Fall
2011)
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2. RR: Definitely the proliferation of mobile. E-gifting applications are probably the game changer. The jury is still out on the volume retailers
are getting through that channel, but it’s in the early adoption stage. The key thing is making sure you have very sound, secure systems
that your payments are going through.
Paybefore: What’s most important for retailers to consider when they are looking at adopting mobile or e-gift technology?
RR: Security is one thing, but also at the top has to be the ease of redemption. The whole
end-to-end experience of that virtual gift card has to be as enjoyable as with a physical gift card.
Paybefore: I heard that online sales of gift cards are less than 10 percent of gift card sales, although it can vary by retailer. Yet e-
commerce grabs all the headlines.
RR: Third-party continues to be a strong channel for gift card sales. The convenience factor lends itself to those planned and impulse
purchases that you make at grocery and drug stores. Buying a physical gift card online doesn’t lend itself to that convenience factor.
However, many brands have added an e-gift card option to their Websites and their social media pages, which allows the instant gifting
consumers demand. Some brands have added personalization features to their e-cards, such as the ability to upload photos and add an
audio voice message, which enhance the personal gifting experience. These e-cards or v-cards (virtual gift cards) can be delivered to email
addresses on computers or smartphones.
Paybefore: Do you think e-gifting will be more popular on the consumer side or B2B side?
RR: Both. I know as early as two years ago a lot of the incentive houses were looking for virtual applications for fulfillment. It’s easy and
efficient. You can customize the virtual cards easily and send them out instantaneously. B2B has definitely tapped into the e-gifting channel
and that will only get bigger. For example, in July, SVM acquired the company GiftZip.com, which serves as a gateway to retailers that offer
e-gift cards online. Expanding its portfolio of physical gift cards to include digital delivery allows SVM to be more nimble, affordable and
productive to its clients. Consumers are getting more and more adapted to having the ability to send and receive gift cards on their phones.
You don’t see people without their phones. So it’s going to be a natural segue.
Paybefore: Do virtual/mobile cards provide any other benefits?
RR: They’re a cost-effective way to add additional marketing components that target consumers who already like your brand, whether it’s
encouraging them to sign up for your loyalty program or offering them a special discount for redeeming their card by a certain date. They
give retailers another opportunity to collect data on consumer behavior, not just from the purchaser but the recipient as well.
Paybefore: How are your members using social media?
RR: Everyone I talk to says social media has a big part in exposure, but the jury is still out on driving revenueue. In terms of marketing and
exposure, I feel sorry for any marketing person who doesn’t have a social media background. The trick is to figure out how to monetize it.
I found it interesting that Lady Gaga launched her CD on FarmVille. This is just one example of how the lines between the virtual and real
worlds are getting blurred. All ages play these virtual games, so it makes sense to tap into that somehow.
Paybefore: What are you most excited to see this holiday season?
RR: Last year we saw flat to a slight uptick for gift cards sales. All indications are that we’re going to continue to bounce back. We’re
counting on mobile apps and the virtual gift cards to lend some additional excitement, but for the most part our members are keeping
their plans pretty close to the vest. RGCA is supporting a new campaign created by Gift Card Impressions called “Gift Card Weekend.”
There will be a national push January 6-8 to encourage consumers to redeem the gift cards they received for the holiday. We typically
don’t endorse any particular vendor’s products, but in this scenario Gift Card Impressions has created a campaign that is good for
consumers and good for our industry. We jumped on the opportunity to create some national buzz about gift card redemption.
As for in-store buzz, the retail brands are looking for additional ways to make their cards stand out. They’re paying more for third-party
premium placement in displays and in locations throughout the store, such as at checkout. We’ll continue to see promotions such as
“buy a $50 card, get a $10 card for yourself.” And, there’s still a lot of creativity and innovation in terms of unique shapes for cards and
their holders. The Home Depot has a gift card holder that resembles a paint can and another that looks like a level. Adding small touches
like this really helps make the gift card more personal.
Paybefore: Look into your crystal ball for us. What’s ahead for retail gift cards?
RR: In a nutshell, mobile, mobile, mobile. We’ll see a lot of expansion and growth there. For the association, we have lots of initiatives planned.
Q&A
with
Rebekka
Rea,
RGCA
(Fall
2011)
-­‐
Paybefore h>p://paybefore.com/north-­‐america/qa-­‐with-­‐rebekka-­‐rea-­‐rgca-­‐fa...
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We’re going to add to staff and will be getting more involved in the legislative aspects, continuing to educate public officials and
consumers on the positive attributes of closed-loop gift cards.