Kmart shoppers can now purchase plastic gift certificates rather than paper ones.
The gift certificates are magnetic stripe cards, called Kmart cash cards, which also double as AT&T calling cards and can be reloaded when their values are depleted.
Kmart is working with Stored Value Systems Inc. to implement the program. That company is a subsidiary of National City Corp., Cleveland, and is based in Louisville, Ky., along with the parent's merchant processing company, National Processing Inc.
The cards, which went on sale last weekend at the 2,122 Kmart stores, are expected to boost sales and promotions while keeping more customer money in the store.
"Business has shifted to stored value from paper certificates," said Richard G. Barlow, president, Frequency Marketing Inc., Cincinnati. The Kmart cash card "simplifies transactions at the point of sale and conserves all of the value of the transaction" in Kmart's favor.
Typically, when a gift certificate is redeemed, "the cash difference goes to the consumer," he said.
Kmart customers who return items without receipts will be given cash cards rather than cash refunds to buy store merchandise. The company will continue to pay cash to customers who have valid receipts.
The refund policy is "more customer-friendly (and) reduces the attractiveness of scams while limiting risks," Mr. Barlow said.
Mary L. Lorencz, a spokeswoman for the Troy, Mich.-based retailer, said KMart was "looking to boost gift certificate" sales and "make refunds without receipts easier."
Gift certificates are "very labor-intensive" and require paper processing that the stored value card obviates, she added.
"It lends itself to rewards and incentive programs," said Thomas L. Recktenwald, executive vice president of sales and marketing at Stored Value Systems. "It will stimulate sales" for Kmart.
The cards, which can be loaded with any dollar amount, will also provide Kmart with sales data helpful in building customer profiles.
Mr. Recktenwald said Stored Value Systems will be able to track card usage and analyze the sales lift they might be responsible for.
Mr. Barlow said that data can include the time between card issuance and use, the number of store visits, and transaction size.