If you’re still using paper gift certificates as you gear up for the 2017 holiday shopping season, it’s time to consider making the switch to plastic. The National Retail Federation expects this year’s retail sales to top 2016’s $658.3 billion, and you want to harness as much of that purchasing power as you can.

You may have shied away from making the transition to plastic gift cards because the up-front investment is greater than issuing paper gift certificates, but the return on that investment is significant, in terms of profit and customer satisfaction.

Here are five reasons it’s time to stop issuing paper gift certificates:

  1. Your customers don’t like them. Consumers strongly prefer plastic cards, so they’re more likely to purchase them. Paper gift certificates are more easily damaged and don’t fit into a standard wallet like gift cards do. Plus, in the era of online shopping, many people prefer purchasing and redeeming gifts online. That’s much easier to do with gift cards, many of which can be issued virtually. In short, gift certificates are less convenient to give and receive, and the customer experience of using them is much more cumbersome.
  2. You’re likely to lose money on paper gift certificates. If someone with a gift certificate buys a product that costs less than the amount of the gift certificate, it’s common practice to give them the difference in cash. And if they return the product they bought using a gift certificate, you’re probably going to give them cash back then, too. That’s cash lost. With gift cards, on the other hand, if someone buys a product that costs almost the full amount of the gift card – but not quite – they’re likely to forget about or write off the remaining funds. That’s profit for your business. Sure, maybe it’s a profit of $0.66, but when multiplied by thousands of gift cards, those dollars and cents add up.
  3. Paper gift certificates invite human error. When a customer buys a paper gift certificate, it’s up to your employee to ensure the transaction is recorded correctly. If the employee is busy or distracted, it’s easy to make a mistake. Let’s say a customer wants to purchase a gift certificate for $50. The employee gets a pen and writes $50.00 on the certificate, but accidentally keys $5.00 when ringing up the transaction. Or charges the correct $50 for the purchase, but accidentally writes $500 on the certificate. Once the customer walks out the door with that piece of paper, there’s no way of knowing what actually happened during the transaction, and you’re liable for the lost money. With a gift card, the process is digital. Many cards come in pre-loaded amounts that employees just need to scan to activate, and even when they need to key in an amount, the card and the transaction are digitally linked, so your system knows for sure what the card holds.
  4. You lose an opportunity for display and branding. Helpful husbands, convenience shoppers and last resort shoppers, three of the segments WalletHub has identified as gift card buyers, probably aren’t heading to the store with the intent to buy a gift card. If they see a display, however – especially a display of fun, seasonally-branded cards – they may end up picking one up for an upcoming gift-giving occasion. Paper gift certificates don’t give you the same opportunity to catch customers’ eyes. Because they’re susceptible to forgery, you’ll want to keep them locked in a drawer behind the register. Since gift cards aren’t activated until purchase, there’s little danger in leaving them out on display.
  5. Paper is harder to track. It’s always important to know how, when and why people are buying your products. With plastic cards, you’ll get reports on how long people waited to redeem the card, what they bought, and how much they spent over or under the gifted amount. Paper gift certificates are near impossible to track once they leave the premises.

Holiday spending is increasing, but so is competition over where it’s increasing. To make the most of holiday gift purchases, make sure you offer cards instead of paper.