Entertainment retailers woo customers with online stored-value cards

Hollywood Video, a unit of Hollywood Entertainment Corp., had eyed offering stored-value cards as a means of increasing services to customers, but balked due to risks related to credit card chargebacks stemming from fraud, says Dave Baldwin, director of business development. "The prepaid market was ripe with opportunity but fraught with what seemed to be insurmountable risks," he says.

But its new stored-value card system from Vesta Corp. comes with freedom from chargebacks, or credit card purchases that get charged back to merchants when transactions are determined to be fraudulent, he says.

“We absorb all risk of chargebacks,” says Rocky Scales, vice president of sales and marketing at Vesta. “So Hollywood can aggressively market its stored-value card services.”

Hollywood lets its customers replenish the value on their stored-value cards on its web site, HollywoodVideo.com, where customers can also build loyalty points related to amount of value kept on their cards. Consumers purchase the cards at Hollywood Video stores, then can replenish their value in stores or on the web. Although HollywoodVideo.com lets shoppers purchase digital videos and games through links to Amazon.com, its stored-value cards are only available for in-store purchases.

Musicmatch.com, the online provider of digital music recordings and streaming music feeds from radio stations, is offering a Vesta stored-value card program that can be used for all online purchases. Musicmatch sells its cards in convenience stores and other retail locations. Card owners enter a code number from each card online when making purchases, then use credit cards, debit cards and electronic check services to reload value online.

Musicmatch says it expects the program to attract young customers who don’t have access to credit cards for online purchases, figuring young consumers can have their parents replenish their card value. "This program with Vesta enhances our retail distribution channel and allows us to increase our visibility with consumers," says Mike Matey, vice president of consumer marketing at Musicmatch. "For the first time, music fans who do not have access to a credit card will be able to purchase and legally download songs online from Musicmatch."