Protect against retailer collapse

By Michael Dawson, Group CEO of One4all

A new YouGov opinion poll has shown that 86% of adults in Britain believe that all gift cards should be regulated to protect consumers in the event of retailer collapse. This uncertainty stems from the fact that in a sector currently worth over £4bn most gift cards are not regulated. Consumers are losing confidence in gift cards because most offer no protection in the event of a business collapsing.

This is a strong message to the industry that the public believe greater consumer protection is needed in order to maintain confidence in the gift card market.

Considering gift cards and vouchers are used by companies of all sizes as a fantastic way to motivate and reward employees, they need to be confident in the value of the reward. The appeal of giving such a reward is that as the employee chooses, they will remember their employer for it – however, this won’t be a great memory if the store card is not valid because the retailer has collapsed.

One4all does offer one of the few regulated gift cards in the UK market. It is not dependent on the fate of any single retailer, redeemable in over 17,000 retail outlets and on sale in 11,500 Post Office branches nationwide. It is also a regulated product, providing reassurance to customers that their product – or reward – is protected.

Employers need to be reassured that they are rewarding their staff with a regulated, safe, useful product.

Legislation already exists to protect ‘emoney’, the electronically stored monetary value associated with pre-paid cards and gift cards. Regulation in this area is contained in EU legislation but transposed into British law. A key requirement of the directive is that emoney issuers must hold 100% of the outstanding monies on regulated emoney products in segregated accounts, ensuring that all funds received from customers are protected in the event of retail collapse.

Cards operated by individual retailers are not obliged to be regulated, but they can opt in voluntarily, to give greater security and reassurance to their customers. In Ireland, the two largest petrol-retail groups Topaz and Applegreen have opted for this route, providing the full protection of emoney regulations to their gift card customers. In the UK market, only multi-retailer gift cards, such as One4All, give consumers this level of protection.

The YouGov poll also revealed that the majority of consumers are unaware of these safer more flexible products, with 91% of respondents saying that they did not know that regulated gift card options were available. The poll, which surveyed over 2,000 people, also found that 78% of people said they would feel more confident purchasing a gift card if they knew the money was safeguarded in the event of retail collapse.

Regulated products bring clear benefits to consumers, employers and their staff – giving them the reassurance that they won’t be left out of pocket in the event of a retailer collapsing.

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