Walmart Launches Gift Card Exchange: Will Take 200 Other Companies' Cards in Return for Its Own

Gift cards have become the present of last resort. Aren't sure what to get for the person who has everything or whose tastes you can just no longer predict? Send them a loaded card which skirts the perceived tackiness of cash but avoids the 'what were they thinking?' cringeworthiness of the Hail Mary gift.


The benefit to merchants is that over $1 billion worth of cards go unused annually. That's a lot of money on which they can collect interest. But it is also becoming well known as a challenge for those attempting to market the 'better than cash' alternative.

So Walmart, whose sales have been flagging, is testing an exchange concept in which it will accept the gift cards from 200 companies other than itself. In return, consumers get a Walmart gift card. Not always for the same amount (percentages differ depending on whose card it is and however the calculations worked for Walmart).

The company benefits by creating some liquidity in a moribund market - and it captures some value for itself. In the larger sense, this plays to Walmart's desire to a 'bank' for those who often can not afford the real thing - and it gives the company access to that very large - and very enticing - float. Smart. JL

The Associated Press reports:

Up to about $1 billion worth of gift cards will go unused this year. That’s because recipients either lose them or can’t figure out what to buy.
Starting Christmas Day, Wal-Mart is letting customers exchange gift cards from more than 200 retailers, airlines and restaurants for a Wal-Mart card. The cards don’t expire and can be used in stores and online.
The exchange may send more shoppers to the website of the world’s largest retailer.

It’s a test program, but if it’s successful, Wal-Mart Stores Inc. said the card swap could become a permanent service. Wal-Mart spokesman Ravi Jariwala said the chain doesn’t have specific metrics to evaluate that but will watch how shoppers react.
Shoppers won’t get the full value of their gift cards to use at Wal-Mart. For example, with Amazon.com, customers can redeem up to 95 percent, while for Staples that figure is up to 90 percent and for Gap, up to 85 percent. For some brands, a Wal-Mart gift card will be worth just 70 percent of the original card.
Up to about $1 billion worth of gift cards will go unused this year, according to CEB TowerGroup, a consultancy. That’s because recipients either lose them or can’t figure out what to buy.
“We recognized that this was an opportunity,” said Jariwala. “A large number don’t get redeemed. We figured this was a good way to get gift cards in the hands of more customers.”
He said that 95 percent of Wal-Mart holiday cards are typically redeemed by February.
Wal-Mart gift cards are the most sought-after on CardCash, the country’s largest gift card exchange website, said CardCash CEO Elliot Bohm. CardCash is Wal-Mart’s partner in the program. Financial terms of the deal weren’t disclosed.
To exchange a card, go to http://walmart.cardcash.com and input your information. The Wal-Mart eGift cards should be emailed to you within an hour.