Ai Editorial: Counting on gift cards as a miles/points burn option

25th September, 2019

Ai Editorial: Only 30% of the top 35 global airlines have a gift card. Why airlines should consider gift cards and what they need to be wary of, probes Ai Ritesh Gupta

 

Exchanging membership rewards points for gift cards is an option that airlines can consider. Not many airlines, especially in the Asia Pacific region, have considered the utility of gift cards as of today.

Only 30% of the top 35 global airlines have a gift card, whereas seven of the top 10 hotel brands have a gift card, according to TripGift’s, Head of Strategic Partnerships, Todd Tomlin.

Explaining the benefits of gift cards as a miles/points burn option, Tomlin highlighted a gift card:

  • Allows loyalty members to burn miles/points at lower values
  • Rewards less frequent loyalty members
  • Engages loyalty members outside of travel brands’ home region
  • Connects to loyalty members’ everyday needs (grocery, fuel, etc.)

A benefit that stands out from a customer’s perspective is purchasing versatility, as they gain an option to select the item they want rather than receiving a reward chosen by the brand. Gift cards allow customers to buy into the brand as well and utilise that prepaid card to purchase a seat, room night etc. From travel perspective, there is an option to redeem a hotel, tour, cruise, car rental or experience. 

Over the next few years, more airlines are expected to enter the gift cards space. The U. S. market is fairly penetrated, however airlines can do a better job in the manner in which they market and utilize gift cards. The APAC region has a great opportunity, AirAsia is one airline that has taken a plunge in this space, shared Tomlin. Instead of counting on gift cards initially as something that’s being sold in the store, airlines can create a product for marketing purposes. Say, for buying airline tickets for certain dates or to a certain destination and then receiving a free gift card for the same. Also, according to Tomlin, gift cards usually feature higher conversion rates than a coupon. Today airlines use miles for such type of behaviour or might involve couponing, but gift cards are 75% more likely to be used than a coupon at the same exact value, mentioned Tomlin. “Consumers when they receive a gift card they feel like they have cash in hand and 75% are more likely to engage whatever behaviour a brand intends them to indulge in with that gift card,” said Tomlin.

The value for loyalty currency is of course going to be a key consideration. A benchmark is said to be 1 cent per point. Other than fulfilment, liability and reconciliation, e-commerce players have to ensure that they make it simpler for shoppers to buy and use gift cards, for instance, via redemption widgets. So this way they can avail their gift card during the checkout process or add a gift card balance to their account. Also, as loyalty rewards, they let loyalty program members being in control of how they wish to use or even gifting a gift card reward to friends or family members.

Fraud prevention

At the same time, airlines need to have a fraud management solution in place for the same.

Fraudsters have been targeting gift cards since other areas for fraudulent activities are getting restricted.

Today there are restrictions in terms of the value for which a gift card can be bought or used. Many retailers place limits on the amount loaded onto each eGift card. This is to deny money launderers from misusing the cards by secretly loading cash onto them. There are also rules that limit shoppers to buying a definite number of eGift cards at a time, up to a certain value. From an experience perspective, the $600 maximum value purchase when stops a user from using a $2000 eGift card fully ends in a disappointing experience.  

Fraud prevention specialists highlight that rather than using inflexible rules, it is time for travel merchants to assess a shopper’s behavior to separate genuine and fraudulent behaviour.

Here machine learning and real-time pattern recognition can help. For instance, as shared by CashShield in an interview with Ai, a data point like the movement of cursor paves way for the system to uncover when a fraudster is trying to act as an authentic consumer by making micro-changes between each eGift card transaction, to avoid suspicion for purchasing many cards at once.  

Merchants are also trying to ensure that customers are more vigilant of their gift cards.

 

TripGift’s, Head of Strategic Partnerships, Todd Tomlin is scheduled to speak at the 10th edition of MegaEvent Worldwide to be held in St Petersburg, Florida (29-31 Oct, 2019).

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