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Internet Merchant ID's & Gift Vouchers


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I just had a very interesting meeting with my bank manager with regards to setting up a merchand ID - this is so I can interface a store more directly with the bank, as opposed to using a service like WorldPay.

 

The % rate charged and the period that funds will be held, depends on the results of a risk assessment on the business as a whole.

 

One area in which the bank had quite a strong opinion on, was the selling of Gift Vouchers, online.

They view this as extremely risky - in terms of fraud, and also liability in the event that the company were to fail.

 

I see this as a real shame - gift vouchers are a great 'viral marketing' tool - the sender is basically introducing new customers to the site for you - but in the face of advice from the bank - I am electing not to feature them - for the time being.

 

I wonder, how many people feature Gift Vouchers on their sites - are they successful - are they worth the risk - have they had similar feedback from banks etc ...?

 

BrianD

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Brian,

 

Quite some time ago another user contacted a merchant account provider and had a similar problem only they wanted to have the gift vouchers have an expiration date. (Which we found out was illegal in most places) I am curious as to why they find the GV so "risky"?

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I just had a very interesting meeting with my bank manager with regards to setting up a merchand ID - this is so I can interface a store more directly with the bank, as opposed to using a service like WorldPay.

 

The % rate charged and the period that funds will be held, depends on the results of a risk assessment on the business as a whole.

 

One area in which the bank had quite a strong opinion on, was the selling of Gift Vouchers, online.

They view this as extremely risky - in terms of fraud, and also liability in the event that the company were to fail.

 

I see this as a real shame - gift vouchers are a great 'viral marketing' tool - the sender is basically introducing new customers to the site for you - but in the face of advice from the bank - I am electing not to feature them - for the time being.

 

I wonder, how many people feature Gift Vouchers on their sites - are they successful - are they worth the risk - have they had similar feedback from banks etc ...?

 

BrianD

 

We offer gift vouchers on our store.. We haven't sold many..

Extreme Alterations

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There seems to be two main areas of risk that the bank is considering - the first obviously being fraud

 

- ie a customer uses a stolen credit card to purchase the certificate, then uses the certificate to purchase goods - six months later there is a chargeback on the credit card purchase

 

- the second area, was more directly related to the performance of the company - and as you mentioned, expiration dates. The bank was not comfortable with a long (six months or more) expiration date.

 

The problem seems to be that if the company sells $1,000 of gift vouchers, then uses that income for the business, and the business goes on to fail, the customers who bought the gift vouchers have a claim against the company.

 

To be honest, I don't really see a difference between a gift voucher and any other product - although I wonder if there may be an issue with the credit card companies themselves - currently, if goods aren't delivered , a customer can claim a refund from their credit card company - perhaps this doesn't apply to gift vouchers?

 

 

BrianD

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We offer gift vouchers on our store.. We haven't sold many..

 

The store I am currently building is gift/home interiors orientated - gift vouchers would have been, I think, a great addition to it - I've told the bank that for now, we'll leave them off and 'review the situation' in six months time - don't want to let the bank have the final say of course!

 

BrianD

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