November 24, 2009
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News: Canadians Will Love AmEx Gift Cards
The most popular gift item for the holidays this year is expected to be the gift card. Not only can you purchase gift cards at the store, you can purchase them online and at other mass retailers like grocery, department stores, and pharmacies. Gift cards have the potential for being easier on the credit card spending because it allows you to stick within your budget. Some credit card reward programs even sell gift cards and allow the customer to apply cash points towards the purchase. It's really hard to beat that. The gift card market has exploded across the globe. Canadians spend nearly $6 billion a year on gift cards. It wasn't difficult to predict that credit card companies would jump at the chance to enter the gift card market. American Express, Visa, and MasterCard are all marketing their products which can be used anywhere the three card networks are accepted.
Although Ontario's 2006 gift card legislation banned most of the unfair and deceptive fees from retail store gift cards, the rules have no authority over credit card gift cards. Unfortunately, the recent new credit card regulations introduced by Finance Minister, Jim Flaherty, do not make provisions for them either. Therefore, the hole remains which allows lenders to continue bleeding consumers with unfair and hidden fees. Most likely the Finance Minister expected card companies to voluntarily follow the same set of standards for the retail gift cards. One company has accepted the challenge of eliminating fees from its gift card; American Express.
American Express has been the top performing credit card company over the past several months and will most likely maintain its position as the word spreads that their new "game changer" gift card comes without fees. The company knows it's the industry leader and expects to remain as leader of the pack. Howard Grosfield, Vice-President of American Express Canada, said that the company's fee-less gift card "will force other companies in the gift card space to follow our lead." If Visa and MasterCard want to remain in the Canadian gift card market, the two card giants will need to step up to the plate with their own fee-less gift card.