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Boscov's, a family-owned, billion-dollar department store chain based in Reading, PA, operates 41 brick-and-mortar stores and also sells through its Web site. About four years ago, it moved from paper gift certificates to gift cards, outsourcing the entire program to a third-party supplier. The outsourcing included gift card production, account maintenance, authorization/settlement, help desk, and IVR (interactive voice response) functions for which Boscov's paid a transaction fee each time a card was used, whether for a transaction or a balance inquiry.
Boscov's found it was using the gift cards for more functions than it had been using gift certificates. Because of the transaction fees, the gift card program became cost prohibitive. The retailer used gift cards to issue merchandise credits, in reward programs for its in-house charge accounts, and as customer purchase incentives. "As our usage of gift cards began to rise, so did our transaction fees," says Dean Sheaffer, senior VP of credit and CRM (customer relationship management) at Boscov's. "We were paying roughly $200,000 in account and transaction fees each year."
After three years with the third-party service provider, Boscov's looked for an alternative. "We determined that we could provide gift card services more cost effectively by moving the program in-house," says Harry Roberts, senior VP and CIO at Boscov's.
