Taking Gift Cards to North and South America (March 7, 2013)
March 7, 2013
On the final day of Prepaid Expo USA in Orlando, Fla., this week, First Data’s Michael Hursta, vice president, prepaid category manager, discussed consumer research that reveals some challenges and opportunities with taking closed-loop gift cards into international markets. In Latin America, First Data looked at five countries—Mexico, Brazil, Guatemala, Chile and Costa Rica. Hursta acknowledged the difficulty of generalizing across those five markets, but explained that some keys themes emerged. There is a relatively low awareness of gift cards in Latin America and very little prepaid spend compared to cash, debit and credit, Hursta said.
“There’s a huge emotional component with gifting in Latin America … Personalization is absolutely key—the more you can speak to the personal relationship or event—wedding or birthday—the more favorable consumers viewed the gift card,” he explained. In addition to offering a wide variety of design choices associated with seasonality or special events/celebrations, Hursta recommended bundling gift cards with other types of offers, such as small gifts, interesting packaging options or even loyalty to make them more appealing.
Hursta spoke briefly about the Canadian gift card market—where research suggests consumers might make the switch to e-gifts faster than U.S. consumers—before turning it over to Jacqueline Shinfield, a partner in the financial services regulatory group at Blake, Cassels & Graydon LLP, to discuss the legal landscape for gift cards in Canada. “The good news is there are no licensing requirements,” she said, noting that retailers that sell gift cards are not considered money services businesses. However, she noted that if retailers have banks in their corporate family, they could be deemed a foreign bank and thus would not be able to operate in Canada unless they structure their programs on a cross-border basis or obtain regulatory approval.
Shinfield also detailed some of the differences in legislation by province and explained that national programs must be bilingual to satisfy Quebec. “Canada is a small market, and it would be difficult to roll out a program and not include Quebec.” The challenge is that disclosures on the cards, which in some provinces like Alberta are quite lengthy, have to be in French and English. The Canadian government also is in the midst of passing of one of the most restrictive anti-spam laws in the world, which is expected to go into effect this fall/early 2014. The anti-spam laws will require, subject to limited exceptions, a person’s consent to receive e-mails or other electronic communications, however, that consent cannot be obtained by way of e-mail.