as the pre-holiday consumer binge on gift cards left you feeling like the Grinch, watching from afar as everybody else celebrates? By most accounts, ISOs and merchant level salespeople (MLSs) have yet to cash in on a booming gift card market.

Although gift card hype abounds for the upcoming holiday season, it's far from being a once-a-year opportunity, and gift card program providers are eager to work with you to expand sales.

Gift card program providers have grown savvy and now offer generic gift cards in addition to customizable cards in order to appeal to the "mom and pop merchants" who are often looking for a low cost, fast and easy way to get in the gift card business. This means you can often work with a selection of generic preprinted cards, rather than trying to design a custom look and feel with limited resources.

Some gift card companies have focused on developing hot leads programs. Rather than trying to create instant experts in the field, they partner with ISOs/MLSs who are closing on a credit card solution. The idea is to funnel a gift card referral to the gift card company to close the sale and then pay a commission.

Whatever approach makes sense for you, don't look at the coming holiday season and roll your eyes at a "missed opportunity." Gregory R. Grove, Vice President of Marketing for Valutec, a company that has provided gift and loyalty programs to merchants since 1998, said it's a mistake to think of gift cards as only a seasonal holiday product.

"Birthdays are the number one occasion for gift card purchases, which means that NOW is always the best time for a merchant to implement a gift card program," Grove said. "Plenty of merchants will act too late for the 2004 holiday season, but they can still put a program in place for the next string of important gift holidays from Valentine's Day to Mother's Day, graduations and weddings."

But there's no doubt that interest in gift cards is at its height during the holiday retail season. Over the last few years, the phenomenon has soared. According to Valutec's Web site, gift cards represented 7% of all retail sales and outsold paper certificates $45 billion to $6 billion in 2003.

This year, 64% of consumers said they intend to buy gift cards, according to the 19th annual consumer survey of spending plans and trends commissioned by Deloitte & Touche USA LLP. That puts gift cards as the number one gift purchase of choice, ahead of apparel, CDs, DVDs, tapes and books. Market research firm TowerGroup found that gift card dollar volume grew by 50% from 2002 - 2003 and projects it will grow to more than $90 billion in sales by 2007.

Yet the ISO/MLS channel has not fully capitalized on this burgeoning demand. That, in large part, may be because it's been hard to imagine gift card programs at the small merchant level, where there's no infrastructure to support it.

Many people undoubtedly think that gift card programs only make sense with national brands such as Home Depot or Blockbuster Video.

That's far from the case. Gift cards should be as ubiquitous for small merchants as that other stored-value phenomenon: the phone card. (Neither small merchants nor ISOs/MLSs had the infrastructure to support a phone card system, yet phone cards have become a wildly popular moneymaker.)

The Deloitte & Touche survey found that half of surveyed consumers will purchase cards for stores or products; 34% will buy cards for restaurants, and 27% will buy them for services or experiences.

Various surveys indicate that 65% - 75% of consumers have purchased or received gift cards; this represents a phenomenal leap from only four years ago when about 33% of surveyed consumers had purchased or received cards.

With such solid consumer demand, it's only a matter of time before your smaller merchants get sold on the benefits of gift cards. The issue then becomes: Who is doing that selling? You or a competitor?

"A key point that is often overlooked and is just beginning to be realized is that 'gift' creates a direct and constant dialog between you and the merchant," said Edward Ayala, Director of Channel Sales with Open Payment Technologies Inc. (OPT), a division of Magex Holdings.

OPT provides stored-value products and electronic payment processing services to vertical markets, including retail, hospitality, restaurants and supermarkets.

"Gift card programs typically only get bigger, not smaller. You quickly become a revenue-generating partner with your customers, not just a vendor. As sales increase, they will need more cards, more processing, etc."

Providers of gift card programs such as Valutec and OPT have developed programs to help ISOs/MLSs make the sale to smaller merchants.

Valutec has introduced two small merchant quick startup packages, Jumpstart and LaunchBox, designed to simplify the sales process for ISOs/MLSs.

"We have developed a wide variety of corresponding sales materials and promotional pieces that ISOs may use to get in the door with new merchant prospects and to sell gift card to their existing merchant customers as a retention strategy," Grove said.

"OPT strives on giving our ISO partners the greatest control when offering a gift card program," Ayala said. "It has always been OPT's goal to provide the best training to our ISO partners."

That training includes live or telephone-based classes with ISOs/MLSs and regional managers. The training focuses on: pricing methodology; the card devices on which OPT's Opticard is certified; the card manufacturing process; merchant setup; application downloading; and using the documentation to train merchant customers.

Once you're primed to sell gift card programs, the issue then becomes how to convince smaller merchants to try something new.

"We find that most merchants are interested in gift card, but aren't as eager to change their credit card processing vendor," Grove said.

"One effective strategy is to bundle a discounted gift card program into a credit card processing offer that includes a new multi-application terminal lease that will allow the merchant to run multiple applications on a single piece of equipment.

"The value proposition is speed, convenience and a total bundled cost that is lower than an a la carte approach."

Recent advances in POS terminal technology have provided the basis for this level of flexibility available to ISOs/MLSs.

However products such as VeriFone's Omni 3750 multi-application terminal must be backed up by a program like VeriFone's Value-Added Partner (VAP) program to ensure cross vendor compatibility.

These types of solutions ensure that gift card companies adhere to strict guidelines for everything from software quality, user interface and documentation to Class A support and terminal management capabilities.

Grove encourages ISOs/MLSs to keep the initial programs simple rather than trying to simultaneously launch multiple programs such as loyalty, promotional and other prepaid programs.

Valutec also preaches the ability to get the merchant up and running quickly so that they can start generating sales and profits immediately.

Some of you might still question whether there is a life for gift cards in the channel. But ask yourself, if you've got 1,000 merchants in your portfolio, how many are in the retail and restaurant categories?

The real opportunity is with your existing installed base. It's fairly cheap to sell to somebody to whom you've already made a sale.

The goal for ISOs/MLSs should be to combine the best terminal with the best value-added programs to create "stickiness" and to enhance merchant retention.

If you haven't developed a targeted marketing strategy to offer programs beyond credit and debit acceptance, you're opening up your merchant base to someone else who will come in and trump you by selling services that you have not yet offered.

"By becoming a revenue-generating partner, it is much harder for a competitor to take your customers," Ayala said.

Patricia L. (Patty) Colby is the Manager of VeriFone Inc.'s North America Value-Added Program (VAP). She manages the company's strategy regarding all VAP initiatives. She also coordinates the acquisition and execution of new value-add relationships and launch programs. E-mail her at patty_colby@verifone.com . E-mail Eddie Ayala at eddie@optinc.com and Gregory Grove at ggrove@valutec.net .