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UStephen the hen received an M&S voucher from his parents for Christmashe did what many of us do: put it in his wallet and forget about it. Months later, when he buys a sandwich from the store, he remembers that he has it and gives it to him.
“The cashier took it and when he handed it back he said something like, ‘You’ve still got £96-something on your card.’ I couldn’t believe it,” he says. “I continued to use it for the occasional sandwich for another six months until it ran out. This is the best Christmas present of my adult life – it just kept on giving.”
Gift vouchers divide opinion: for some, they’re a way to ensure someone can treat themselves to exactly what they want, when they want, and better than cash because they won’t end up being used to pay on a gas bill. For others, they’re a sign that you had no idea what to get and had to make a panic purchase at the checkout.
However, the industry is worth millions and Christmas is a boom time. Figures from Gift Card and Voucher Association (GCVA) show that in the second half of last year slightly over £2 billion worth of cards and vouchers were sold in the UK. More than half were bought by businesses – a recent trend is for employers to offer vouchers to workers to use at supermarkets and the like – but a separate survey for the association found 33% of adults bought vouchers for Christmas last year.
GCVA disputes old figure of £300m this is often quoted as the value of unspent cards, but the companies’ accounts show that there are voucher balances. This may sound like good news for retailers, but Alec Donald, of Edenred Payment Solutionssays it isn’t. Donald is a bit of a voucher expert having spent almost a decade working for companies running schemes for retailers.
“That unspent money has an opportunity cost,” he says. “A gift card can be an early contact with a consumer – it could be the first time they shop with you. When they use it, they may spend more than the voucher.” He points out the ones for the Cineworld cinema chain – you can put the entire voucher on tickets and splash out extra for popcorn or drinks.
Sanjay Agarwal says his independent spice business, Spice cuisinesees pros and cons in their offering. “They’re great for us from a cash flow perspective, bringing in revenue at the start and encouraging new customers to discover our brand. Often customers spend more than the value of the card, which also contributes to our sales,” he says. “On the other hand, we must carefully manage the gift cards in our accounts as a liability until they are used and set aside a small provision for redemption.”
Every year, Money saving expertMartin Lewis, advises gift givers to think carefully before buying a voucher because they come with a lot more caveats than cash, but some people like to get them.
Helen, a Guardian reader from Oxfordshire, said: “I’m delighted to have received a voucher. I always enjoy picking out a treat for myself, and a voucher involves a bit more effort on the part of the giver than just some spending money.
If you’re planning to give vouchers this Christmas, there are ways to do it well.
Think about it a little
A common accusation against gift vouchers is that they show no thought – and if you’ve just grabbed one from Tesco late on Christmas Eve, that might be a fair accusation.
Instead, consider which merchant or experience the recipient would appreciate and how much money they would need to enjoy it. Giving someone a £5 voucher for a shop where most things cost £25 or more is not very thoughtful unless you know other people are doing the same.
One reader suggests giving vouchers for subscriptions or experiences that the other person wouldn’t spend money on themselves, “because they feel it would be too indulgent given their budget,” she says.
Most retailers offer a choice between a physical card or virtual versions. A physical card may seem more thoughtful than emailing the gift, but if you know your friend or relative doesn’t carry a wallet and likes to shop online, the opposite may be true.
Choose the right retailer
First, make sure your recipient has access to each location where they need to redeem the voucher. This is less of an issue than it was before you could shop online, but it’s worth looking into before spending any money.
Among high street retailers this isn’t as much of a problem, but there are quirks. Liberty, for example, has a standard gift card that can be used online, but if you want to gift one of its beautiful gift coins, the recipient will need to visit the London store.
It’s a much bigger deal when you buy vouchers and cards for dining out or experiences. Several readers have complained about experience vouchers incurring travel and hotel accommodation costs to redeem them.
Check the locations to make sure the card can be used near where the person lives, or consider whether you can host the recipient while they’re enjoying an experience near where you are.
Another thing to note is how well a company is doing financially. If you read that a company is struggling, then handing over money for the promise of goods at a later date is risky. Donald says “people got their fingers burned” when the collapse of some retailers was followed by administrators blocking the use of gift cards.
Sometimes these decisions were overturned after considering what shares the company had or the brand was sold – when The Law Commission considered this in 2016 found that out of 15 insolvencies, vouchers were honored as usual in seven cases. In two, they could only be used as part payment – at Borders in the UK and Australia, for example, shoppers had to buy something worth double the value of their voucher. In the remaining six incl Peacocks, Turn and JJB Sports, the vouchers were written off (although some of these firms or the company names have since changed hands and continue to trade). Half a million Zavvi voucher holders lost a total of £4.1m – an average of £8.12 each.
Read the terms and conditions…
Fine print is a big problem when it comes to gift cards and vouchers. Often the terms and conditions will be outlined on the back of a very small card, making them difficult to read at the till. Instead of taking your magnifying glass to the store, do some research online before you buy.
There may be exceptions around usage. John Lewis gift cards, for example, cannot be used on partner sites such as waitrosegarden.com; Marks & Spencer cards cannot be used to purchase its products through Ocado; and most retailers won’t let you use them to buy stamps or another gift card or at a gas station.
One4all cards, which are sold online and in retailers such as Tesco and Morrisons and can be used at a wide range of retailers, are essentially prepaid cards and come with some terms and conditions that most other cards don’t. For example, after 18 months processing fee of 90p per month applies until all money is exhausted.
Again, it’s the experience cards and vouchers that warrant the closest look before you buy.
One reader, who did not want to be named, summed up some of the problems with them: “They are the most burdensome because they come with so many warnings that they are almost impossible to use. The “dark sky experience,” which involves a three-hour drive with small children, especially when it’s not cloudy. Afternoon tea for two which can only be used from Tuesday to Thursday between 14:00 and 17:00, so you must take time off from work. The meal and movie for two that can only be used at a cinema within 50 miles.”
GCVA advises to draw the recipient’s attention to the warnings. “All gift cards are subject to terms of use; let the recipient know where to find them (usually on the back of the card, on the packaging, or on the gift card website). This will ensure they get the most out of your gift,” it said.
Check the expiration dates
Not all cards and vouchers have an expiration date. Theater Tokens can currently be used at any time; I recently found some that were 20 years old and had to email them to convert them to a digital code that I can use online, but it was an easy and quick process.
Ikea currently has no expiry date, and One4all has a five-year term for physical gift cards, but the money can be transferred to a new one after that period. National Book Tokens expire after eight years, but are currently replaced if there is a balance.
Amazon currently has a 10-year deadline, but two years is the current rate among most retailers. The date range is often reset when the card is used or the balance is checked.
Experience vouchers may have shorter terms, especially if they are offered by small businesses, partly because they need to guard against having to honor them when the price may change.
Payment by credit card
If you spend £100 or more on a single voucher, make sure you use your credit card as this provides a back-up if the retailer goes out of business – you can claim the money back under section 75 of the Consumer Credit Act.
“The person who bought the voucher has a claim because that person actually bought goods that were not delivered and a refund is not possible because the retailer has gone bankrupt,” says Gary Rycroft, consumer lawyer and partner at Joseph A Lawyers of Jones & Co.
He says it doesn’t matter that the voucher itself is delivered because “the credit card provider is jointly and severally liable for the goods purchased.” You have six years to file a claim if something goes wrong. This applies if you have purchased the vouchers directly from the company which has gone into administration; if you bought it somewhere else (say a supermarket), you’ve severed the connection between yourself and the retailer.
If you paid by debit card or spent less than £100, you may be able to use a chargeback, but the rules are more restrictive and you only have 120 days from the time something went wrong to make a claim.
Do it yourself
One way to avoid the burdensome terms and conditions is to make your own vouchers. There are many templates online that you can adapt and print, or you can draw your own.
Mary, from Northumberland, says she often receives vouchers from her grown-up children and is happy to do so. But last year, she says, “one couple did give me money, but it was in four fancy envelopes that said ‘when you really need coffee and cake, when you’re out for a walk’ or ‘when takeaway is just that, you you like’ etc. Brilliant idea. I loved spending them on naughty treats!”
And if you get one…
Spend it. “If you receive a gift card, remember that they are not something to put in the bottom of a drawer and save for a rainy day,” says the GCVA. “They are there for you to spend and enjoy, so go out, have fun and treat yourself.”
Stephen is proof that they can be a great gift to receive. “Now I’m looking for sandwich or coffee gift cards to give to others,” he says. “The feeling of being paid for my sandwiches for months was amazing.”
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