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Selling gift card services to merchants decreases the likelihood they will leave to contract with other processors or independent sales organizations, according to industry insiders. "In the stored-value world, attrition is almost nonexistent," says Vaden C. Landers, CEO of Profit Point Inc., a Nashville, Tenn.-based ISO. "Once you get the merchant up and running and get a thousand gift cards out, it becomes a challenge to move the program from one place to another," he says. Gift cards are one of the "stickiest" applications a service provider can sell to a merchant, agrees Michelle Wagner, vice president of global marketing at Elavon Inc., an Atlanta-based acquirer and processor. Merchants can be hesitant to move gift card services among providers because they fear complications that may render the cards inactive, says Landers. "When that customer has a card with $50 on it and wants to use it, you better be able to process that card," he says. Landers estimates Profit Point's merchant attrition among stored-value clients at between 3% and 4%, and he attributes it primarily to "involuntary attrition," such as when merchants go out of business or no longer can afford the card service.
