Apr 22, 2010

American Express to expand roll out of Amex-branded gift cards

American Express Canada is set to widen the roll out of its American Express gift cards to other retailers apart from Shoppers Drugmart and Pharmaprix.

Last November, Amex Canada launched its first gift card in Canada, making it available initially exclusively through branches of Shoppers Drugmart and Pharmaprix. The cards only display Amex’s branding – there is no retailer’s logo on them.

“The cards’ unique selling point is the fact that, unlike gift cards from other issuers, there are no fees for inactivity,” says Stephen Grivakes, Amex Canada’s Gift Card spokesperson. “Other issuers typically charge upwards from C$1.50 per month if a card is not used.”

“Not charging monthly maintenance fees is a big deal for consumers,” notes Mintel Comperemedia senior vice president and cards industry analyst Andrew Davidson. “Visa and MasterCard gift cards still charge monthly maintenance fees.”

Issuers use monthly maintenance fees for inactive cards as a way of getting round Canadian regulations that prohibit gift card balances from expiring. “These fees come as a shock to consumers who are given a gift card, and find that their balance gets eroded after a while,” Grivakes notes.

Grivakes says that another benefit of Amex’s value proposition is that there is no fee to replace Amex gift cards, for example if they are lost or stolen. “Also, other gift card issuers charge to issue a new card once the original plastic expires, usually after five years,” he says. “But we would simply issue a new card for free.”

For security verification and authentication purposes, gift cards have a ‘valid through’ date.

Amex spokesperson Jessica Myers added, “We are still in the process of finalizing agreements (about rolling out the gift card to other retailers), but there are plans in the pipe to expand into name brand and grocery retailers in the second half of the year.”

Grivakes tells Payments Business that Amex is about to start selling the gift cards through other retailers. “We think the fact that our card is open-loop, and can be used anywhere in Canada that accepts American Express, resonates with consumers,” he says.

Amex works with retailers to help them market the Amex-branded cards, Grivakes says. “Our view is that the gift cards need to be visible in the store, and relevant,” he says. “The cards need to be clearly communicated to consumers, and they need to be kept fresh.”

The purchase charge for the Amex gift card varies by denomination: C$4.95 plus taxes for a C$50 card; C$5.95 for a C$100 card; and C$6.95 taxes for a C$200 card.

 

 

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