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As E-Gift Card Purchases Increase, Risk Does Too

Posted, by Adam Merkin on 06/29/2016
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E-Gift Cards are great and we aren't the only ones who think so: e-gift card purchases to continue to increase every year. They fit directly into consumer’s busy life and our culture of having everything at our fingertips. E-gift cards are the picture of convenience and ease and are continually being integrated into mobile wallets and apps on cell phones. Retailers are even creating online malls for consumers to do all their shopping from the comfort of their own home.

Because of this, business is booming. Nearly 76 percent of consumers said they were likely to purchase a digital gift card during last year’s holiday season. And the industry is growing among Millennials, as 90 percent said they were more interested in purchasing digital gift cards now than they were a couple years ago, especially when it comes to storing and using the gift cards on their mobile devices.

Sounds ideal, so what’s the problem?

E-gift cards are extremely attractive for fraudsters because they are instant cash that can be exchanged quickly on online marketplaces. Fraudsters are smart and often have better technology than the security systems designed to fight them off. This leads to a significant amount of fraud when accepting cards but retailers also have to worry about a rise in false declines. Issues like these can turn even the best customers away and can be incredibly damaging for a business.


How to fix it: The answer is not to avoid digital cards or accept fraud as a necessary evil. It is to fix the problem. A company has two choices.

  1. The more expensive option: Handle fraud internally by creating a fraud prevention department within the company.
  2. The better and cheaper investment is to get a third party to do fraud prevention. These professionals have years of experience thwarting fraudsters and they will make your investment in digital cards more profitable and safer for customers and your business.

In short: E-gift cards are incredibly popular gift ideas and consumers love them and truly appreciate them. But there is a serious issue of fraud that needs to be taken as such. Therefore, there needs to be a specific fraud prevention set up by the retailor for which there are a couple of options to do so. It is doable and if fraud is taken seriously E-gift cards can be an incredible tool in a retailors gift arsenal.

Topics: B2B Gift Cards, Gift Card Trends, digital cards, e-gift card fraud, e-gift card purchases

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