Most people’s purchasing power (and hence standard of living) could be raised noticeably, at no expense, through a novel idea called the ShopAmerica Gift Card.

Instead of a social security/tax refund/unemployment/government pension check direct-deposited, why not exchange it for gift cards worth up to 25 percent more than the check? Example: If you want a new fridge, and you have a $1000 tax refund due, you can go online and have that tax refund electronically swapped for a $1250 gift card to a store selling refrigerators.

The benefit to consumers is obvious: anyone planning to spend money at the same place over time (like supermarkets) or on a large single purchase gets a much better deal. The government, retailers and manufacturers will also benefit.

For the government, this is a way to stimulate the economy without increasing the deficit. The government will actually make money by selling the rights to develop the site to the highest bidder — Google, Amazon, EBay, Facebook, Groupon etc., because they can attract advertising.   Advertisers would find the site(s) attractive because of the attention that would be paid.

Participating sellers would quickly recognize the advantages of such an idea. They would get large prepayments earmarked to be spent with them. Also, there is almost no expense in marketing the gift card, just the time it would cost to post products to the site. Currently, for gift cards for sale in a drug store, for example, the sponsor is only receiving about 80% of the face value.

Substantial benefits for consumers are also possible.  For instance, in Boston, Legal Sea Foods Restaurant sometimes offers a free lobster dinner (about a $40 value) to anyone who buys a $200 gift card in the restaurant. So the restaurant is willing to “pay” $40 to place a $200 gift card directly with a consumer instead of having to sell it through an intermediary, who would otherwise have marked it up by that $40.  Yes, it may be true that some people would lose the card or not use it. But, close to 100% of people would use their tax refund and pension/social security checks if they were to be put on gift cards. Even fairly low-income people average more than $1400 in tax refunds. The gift cards would work for all income groups.

Sears and Kmart have also experimented with this type of program when very large checks have been sent out by the US government, such as when stimulus checks were sent to individuals during the past recession. The experience was positive. It demonstrated that this type of program can work.

Many sellers would participate in a program like this, if given the chance. Furthermore, the value to consumers would be great, and the economy could be boosted.  It’s a totally voluntary program so there are no losers. It’s not only for tax refunds, social security, unemployment checks and government pensions, but also for those in the private sector. Once the ShopAmerica site “goes live” many employers could start offering an option whereby part of each pay check is swapped into the site as well. The ShopAmerica gift card site could become the preferred, central low-cost high-value market for high-denomination gift cards, adding many dollars to the average consumer’s purchasing power.

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