Since the days of Adam and Eve, humankind has felt the need to give gifts. Although important, the thought of gift giving is a surprisingly complex part of human interaction that helps to define relationships and strengthen bonds. But as human beings evolve, so does gift giving. Over the years, gift giving has evolved scientifically into the time and money saver known as the gift card.
Overview
Giftcard is a prepaid stored-value debit card. It is usually issued by a retailer or bank as an alternative to cash for purchases within a particular store or related organization. Giftcard is also known as gift certificate in North America, or gift voucher or gift token in the UK.
In the 20th century, when some business organizations discovered cash could be spent anywhere and not necessarily at their place of business, they created a piece of paper representing a pre-established amount that would bring the gift recipient back to their establishment. Hence: Giftcard was invented.
Long before the invention of gift cards, the first paper cash equivalents (aka “gift certificates”) were created by major department stores in the 1930s. Clerks were directed to hide the gift certificates behind store counters and sell them only to specific customers upon request. In the 1970s, the ever-innovative McDonald’s introduced its Christmas gift certificate program which was quite viral. Soon, other restaurants, merchants and malls followed suit.
Neiman Marcus, American chain of luxury department stores owned by the Neiman Marcus Group initially introduced the first giftcard using a payments infrastructure in late 1994. But Blockbuster Entertainment was the first company to do so on a wide scale. They test-marketed them in 1995 and launched them around the country the following year. Over the years from these early introductions, other retailers began to adapt a giftcard program to replace their gift certificate programs.
How Giftcard works
It has been established that giftcards are debit cards loaded with funds for future use, they are generally classified into two: open loop and closed loop cards. Both types can typically be used online and in person.
Open loop cards offer the equivalent of cash – or more precisely, a credit or debit card that can be used at any merchant where that card is accepted, as well as online. Many of the major charge or credit card issuers/processors, like American Express, Visa, Discover, and MasterCard, offer open loop gift cards. These cards will display the payment processor’s logo and can be used to make all types of electronic payments nearly anywhere.
Open loop gift vouchers additionally have the upside of filling in as a standard pre-loaded card. These cards are typically reloadable permitting the user to add money themselves. Open loop cards will some of the time require an activation charge of roughly $5, which must be paid at the time the card is bought.
Just as the name implied, closed loop gift cards are usually marketed by stores, permitting a cardholder to buy anything from that predefined retailer. Close loop cards can commonly just be utilized with a solitary vendor, either at the store or on its site. Nonetheless, in the event that one organization owns several different retailers, it may give gift vouchers that can be utilized at any of them.
Closed loop gift cards normally do not require any activation fees. These gift cards will also not include a processor’s logo though they do include the merchant’s; in a sense, they act as advertising for the store.
The downside to closed loop cards is they usually can not be reloaded, so once the balance is spent, they have no further use. Money on a closed loop gift card may also have a specified expiration date, which requires the user to use the card within a specific timeframe.
Most gift cards have a minimum and maximum initial loading amount between $10, and a common $500. As a precaution to mitigate the risk of losses, many gift cards can also be registered online—a procedure which allows the remaining balance to be tracked and frozen if a card is lost. In this way, some gift cards are safer than cash.
While the two aforementioned types are physical cards, virtual cards which are considered easy to send and pass for a last minute present are another type of giftcards.
Virtual gift card is a code sent to the recipient via an electronic platform. They are commonly referred to as digital, electronic, or mobile gift cards. E-giftcards are sent and delivered electronically through email, app, or text. Delivery time can be nearly instantaneous or take up to 24 hours depending on the retailer.
Depending on the retailer, to use your e-giftcards electronically, you will either provide the gift card numbers on the payment screen when checking out or, you will upload the gift card amount to your account. But in walk in stores, you need to show the e-giftcard on your digital device to be redeemed at the register. You may also print it out on a home printer and bring it to the store.
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