I have long advocated against and drawn attention to the unscrupulous and anti-business practices of Visa and MasterCard’s electronic gift cards. The cards raise questions about the hidden interchange fees forced upon unsuspecting merchants and consumers who do not understand that those “convenient” payment solutions come with a hefty price tag; retailers are forced to pay interchange feeswhen those cards are used; many shoppers loose out when micro-balances remain on the cards. Even retailer-generated gift cards come with costly baggage; many times the small balances are simply not redeemed because it is to hard to cash in a few dollars that remain on the card and to pay the exact amount remaining.
Just down the road from ScanMyPhotos.com [a division of 30 Minute Photos Etc – lead plaintiff in the merchant interchange antitrust price-fixing litigation] and home to our Irvine, California-based headquarters is the famed South Coast Plaza. According to Wikipedia, “South Coast Plaza is an upscale shopping mall, and one of the most notable shopping centers in the United States. In 2004, Women’s Wear Daily reported that the mall had the highest sales per square foot of any mall in California, at about $800. It is also the third biggest mall in the United States.” South Coast Plaza has disbanded its electronic gift cards for paper certificates.
As reported by Orange County Register reporter, Hang Nguyen on August 19,
South Coast Plaza recently switched from its mall gift cards to gift certificates. The decision was driven by shoppers and retailers who preferred the “ease of gift certificates and were frustrated by the limitations of the gift-card program,” which launched less than two years ago, the Costa Mesa mall said in a statement. If shoppers wanted to pay their purchases with both cash and a gift card, they had to know the exact amount on the card. To get that info, they went online, slid the card through one of about 30 readers at the mall or called a number on the card. However, the retailer was not able to tell them their card balance. And if the retailer punched the wrong amount for the card twice, the shopper might have been locked out from using the card for 5 to 7 business days. With certificates, the dollar amount is on the paper. Also with cards, after one year, a $2-per-month fee was applied to unused balances. This fee was charged by American Express, a South Coast Plaza spokeswoman said. The mall said it did not have control over this charge, which is common from third-party issuers. Because gift-certificate processing and management is done in-house, South Coast Plaza can choose to not charge shoppers a fee. It considers its no fee for certificates as part of the mall’s customer service. Also with gift cards, it would take five to seven business days for the customers to see the return issued on the card, unless they returned the merchandise the same day. Funds are immediately available after returns of purchases made with gift certificates. If a shopper does not use the entire certificate amount, the retailer can give up to $20 cash back or a store credit. Or the customer can go to the concierge desk to have the certificate broken down into smaller amounts. “While it may seem like a surprising decision, we discovered that high-tech options don’t always translate to better customer service,” Debra Gunn Downing, the mall’s executive director of marketing, said in a statement. Shoppers can convert gift cards into gift certificates at any concierge location. All existing gift cards will continue to be honored.”
Visa and MasterCard branded gift cards are even worse and come with added concerns as identified by several prior WayTooHigh.com postings. Now, a leading shopping centre has caught on and switched back to paper certificates.