The ShopAmerica Gift Card — How Washington Can Stretch Your Government ChecksMarch 13th, 2012 by Al Lewis (alewis)
Most people’s purchasing power (and hence standard of living) could be raised noticeably, at no expense to anyone, through the ShopAmerica Gift Card.
Instead of just getting a social security/tax refund/unemployment/government pension check direct-deposited, you may choose to exchange your payment at a contracted website, where participating qualified sellers offer gift cards up to 25% more than the check, swapped for the whole check. Example: If you want a new fridge, and you have a $1000 tax refund due, you can go online and have that tax refund electronically swapped for a $1100+ gift card to a store or manufacturer selling refrigerators.
The benefit to consumers is obvious: anyone planning to spend money at the same place over time (like supermarkets) or on a large single purchase gets a much better deal.
For the government, this is a way to stimulate the economy without increasing the deficit. The government will actually make money from Day One on this by selling the rights to develop the site to the highest bidder — Google, Amazon, EBay, FB, Groupon etc. They will want to be selected to develop the site because they can attract advertising easily since people would already be going on this site to shop. They would pay a lot for these eyeballs.
Participating sellers would definitely see the following advantages to doing this:
- They get a large prepayment, which is earmarked to be spent with them.
- There is no expense to them in marketing the gift card, just posting it to the site. (Currently, when you see gift cards for sale in CVS, for example, you can be sure that the sponsor is only receiving about 80% of the face value. Remember, there is expense to marketing anything through stores, not to mention that people purchase them with credit cards sometimes, which itself creates an added expense.)
Substantial premiums for consumers are possible. For instance, up here in Boston Legal Sea Foods offers a free lobster dinner (about a $40 value) to anyone who bought a $200 gift card in the restaurant. So Legal is willing to “pay” $40 to place a $200 gift card directly with a consumer instead of having to sell it through an intermediary, who would otherwise have marked it up by that $40, and only given Legal about $160 for each $200 card sold.. Also, when the government sent around those “stimulus checks” in 2008, several retailers offered to exchange them for gift cards at a substantial premium even with all the paperwork involved in doing that at their stores, by hand.
Bottom line: Many sellers would do this, the value to consumers would be great (larger denomination cards with later starting dates would have the greatest value), and the economy would be boosted. It’s a totally vountary program so there aer no losers.
So far we’ve talked only about tax refunds, social security and unemployment checks and government pensions, but if you work in the private sector, like most of us, you won’t miss out: Once this site “goes live” many employers will start offering the option of having part of your paychecks swapped into the site as well. The ShopAmerica gift card site will become the preferred, central low-cost high-value market for high-denomination gift cards, adding many billions of dollars to the average consumer’s purchasing power.