Gift Card Verification Glitch Hits Wal-Mart, Others

 
 
By Evan Schuman  |  Posted 2007-12-28
 
 
 

Shoppers at Wal-Mart and other chains were unable to use their gift cards much of Dec. 26. While Wal-Mart apologized to customers, it laid the blame squarely on the shoulders of its technology partner.

On Dec. 27, Wal-Mart issued an unattributed statement explaining that, "Early yesterday afternoon, we discovered that several retailers, including Wal-Mart, were experiencing sporadic issues with gift card verifications due to processing errors with our third-party verifier's systems. This delayed the processing of a small percentage of our gift card transactions, and the issue was resolved yesterday afternoon. We apologize for this inconvenience to our customers."

Wal-Mart did not identify the supplier in its statement, but a South Carolina television journalist reported that Wal-Mart told her it was First Data. That station, WIS News 10, said that First Data e-mailed a statement attributed to First Data vice president Jody Soper.

"We have identified a sporadic system occurrence that caused some consumers to experience delays in gift card verifications on December 26, 2007," said Soper's statement, according to the station. "The problem has been isolated and we are working closely with our customers to prevent this situation from occurring in the future. The system is performing normally and we regret any inconvenience this has caused."

First Data did not respond to eWEEK requests for comment.

First Data handles gift card verifications for many retailers and recently reported that Michigan-based super center chain Meijer and Canadian QSR chain Tim Hortons had agreed to use its verification services.

Although the details of the glitch are not yet clear, the timing of this nationwide hiccup couldn't have come at a worse time for retailers.

That timing problem is twofold. In a calendar sense, retailers and gift card exchange sites have been pushing gift card convenience more aggressively this year than ever, positioning it as the ultimate hassle-free gift. To have that network crash on Dec. 26—one of the busiest days for gift returns and gift card redemptions—is certainly not well-timed.

But the bigger picture timing issue is that 2008 has been shaping up as a crucial one for gift card growth. That growth was not merely an effort to get retailers to push gift cards more but involved the use of gift cards as a way of boosting the quality of CRM (customer relationship management) data on customers and prospects; gift cards are also being touted as a way to sharply boost upsell opportunities and gain more new customers.

Two significant startups in the gift card space—PlasticJungle and Leverage—have competing plans to significantly expand their operations over the next few months.

That said, one multi-hour gift card glitch is unlikely to have any lasting impact. But for the retailers involved, it would have been nice had the glitch waited for the weekend.

Retail Center Editor Evan Schuman has tracked high-tech issues since 1987, has been opinionated long before that and doesn't plan to stop any time soon. He can be reached at eschuma@earthlink.net.

To read earlier retail technology opinion columns from Evan Schuman, please click here.

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