benosufan

Just think of the loss the companies like Blackhawk will take due to countless GC buyers suddenly halting their purchases. Any estimates on lost revenues? I know there are other avenues of MS but Amex BB and Serve were the most utilized due to lowest fees and convenience (Walmart and online loads). any thoughts?

vacaloca

The opposite may be true... with much less customers that drain their gift cards completely and quickly, and thus the majority of cards being sold for <$200 much less as gifts, balances on the cards presumably will be higher and thus the companies will presumably profit from the interest on the card balances.

mikeyb45

That is definitely the case. Regular use of prepaid gift cards is much, much more profitable because typically they're swiped as credit for ~2-3% plus some fixed value as an interchange fee, rather than $500 as debit for a single ~$.25 interchange fee. Let's be honest folks, we've been the leeches on the system for some time, and anyone who thinks these companies are making money on our "float" is crazy. Not to mention the fact that the gift card racks will be empty far less often due to our greed and available for other customers to purchase and use in a profitable way.

TAWS

HAWK is publicly traded, so we should know when they report their earnings.

billybayswater

Breakage rates will definitely increase. They will make a lot of money.

benosufan

Great points. But what about Kroger, Ralph's, etc...

DeaconY

Profitability will increase but revenue will definitely go down.

ibleed0range

If you sell them they will buy. I don't see any sales dropping off. If anything, more for the people who consistently buy them, and less worry about them not being restocked.

benosufan

Our stores in central Ohio are always stocked with VGC and MGC. I know many people who got shut down today who will not be buying anymore GCs for MS. Serve and BB was just too easy and profitable compared to other avenues. Simon malls was one of my favs. I bet those receptionists are going to be selling much less GCs now. Oh well, the hard core MSers will find a way but meanwhile the sales will drop IMO. Hope that means more deals on GCs this year. We shall see.

krazykanuck

I can't imagine us buying $500 VGCs was ever profitable for them. Even if you assume they kept the whole $4.95/5.95 purchase fee, and assumed the low end 2% swipe fee, the CC swipe would cost them $10.12 and they lose a few bucks per swipe. I'm sure that's why many grocery stores don't accept credit cards for large VGC transactions at all.

styxfire

I always by groceries when I buy gc's.

Wildcatz1

Was thinking a similar thing, the other businesses that are part of the GC piece and the potential impacts.

Grocery Stores / Office Stores etc - GC purchase amount, foot traffic, other purchases while being in the store.

GC Bank Issuers - Activation fees and other associated fees depending on use

Walmart - If nothing else foot traffic into the store (potential for other sales) plus processing and card swipes.

Amex - Membership base plus loss of Serve/Bluebird etc using accounts for legitimate bill pay and or other services. Also knock on customer loyalty impact for other Amex services/products. A lot of talk across the threads about this. Also not good when you also tack on the amount of business they have lost recently (partnerships etc).

Not an exhaustive list I know and am sure I am missing some of the other key elements but was just a thought when looking at the impacts that this move by Amex could have.

There's also the thought about rewards cards and other signups. We all know that for the truly dedicated there will always be a way to maximize but with avenues drying up, fees for those remaining increasing (2-3% for CC bill pay service providers) and rewards not going as far (mileage for tickets increasing on most airlines through devaluation) it will be interesting to see what the 2016 portfolio of CC products and offerings looks like

WC

Often1

This was a fraction of a fraction of a fraction of the business net revenue. But, it was filled with AML risk and hassle. Not one part of the business chain will lose a nickel on this. People still need groceries.

Wildcatz1

Agreed but think its interesting to look at the potential for impact, no matter how small, the decision AMEX made today can have across those other areas. People do still need groceries but not $200 groceries plus $500 GC for total transaction of $700 per visit

GetawaysRus

I agree. Sometimes I think FTers give themselves too much credit. We don't rule the world financial markets.

The US stock market is way down so far this year, and that's before AmEx dropped the hammer on us. I doubt anyone on CNBC mentioned Serve when they discussed why the stock market was down again today.