WHAT IS A GIFT CARD?
A gift card is a prepaid debit card containing some specific amount of money available for use for a variety of purchases. A gift card is a very convenient and useful replacement for cash when you need to make purchases or you have to gift someone.
HOW GIFT CARDS WORK
It is a form of payment used to make purchases in stores, restaurants, at the gas station, and at any other place you want to make a purchase. The way it works is that you load money onto the card which you or whoever uses the card can spend at locations where gift cards are accepted.
OPEN LOOP VS CLOSED LOOP GIFTCARDS
Gift cards can be in two forms; open-loop and closed-loop. The advantage of an open-loop gift card over a closed-loop gift card is that it can be used anywhere the branch of the card is accepted. On the other hand, a closed-loop gift card can only be used at a specific merchant. For example, when you purchase a gift card from a store like Walmart, you or the gift card’s user would be able to use them to make purchases only at the retailer that issued the card.
PHYSICAL AND DIGITAL GIFTCARDS
The physical form of a gift card means a plastic card while a digital gift card does not have any physical form. In a digital gift card, instead of a physical form, a unique gift code number that you can use to redeem when making purchases is being assigned to you. Meanwhile, physical gift cards remain the most popular kind of gift card used.
PROS OF GIFT CARDS
- Entrance of new customers: For people who are being given a gift card from a particular store they have never been to before, it’s an advantage for the retailer as they gain a new customer. Also, it helps the customer to discover a new place and explore new things. Therefore, gift cards could be of great advantage to both the retailer and the customer.
- Easy to send: instead of shipping gifts to family or friends far away, it is more convenient and less expensive to send them a gift card. With this, they could even pick whatever they want themselves and you do not stress over what they would like or not. You could just get them a gift card of their favorite, loaded with money of course, and send it to wherever they are.
- Controls spending: Another pro of gift card is that it helps to control the spending of the user as it only has so much. Gift cards allow for a precise figure as you can only spend as much as is loaded in it except the recipient decide to load it with more money.
- Gift rightly: If you are clueless on what to get someone as you don’t know their preference, a gift card is your ‘go-to’. It could also be that you do not want them to get uncomfortable with the gift you have in mind to get for them, get them a gift card. People can feel uncomfortable with gifts depending on their relationship with the giver, but no one rejects a gift card.
CONS OF A GIFT CARD
- Conditions and fees attached: Different places put different kinds of restrictions on their gift card and some of these conditions could be so ridiculous and annoying. It is better to do explicit research on whatever gift card you are getting so as not to frustrate whoever would be using that gift card later on.
- No excitement: The fun of gifting is how one can become so hyped and wondering what each person will gift you. A personalized gift always means so much to some people, so giving them a gift card might feel impersonal. Some friends and relatives would prefer a gift that you went out of your busy schedules and time to pick out for them, rather than a gift card.
- Wastes money: One of the biggest annoyances that comes with owning a gift card is having a plastic that contains a total of fifty-two cents in-store credits. After purchasing with a gift card. There may be a small amount left and if not used becomes money wasted.
Read here on how to sell you unused gift cards or buy a gift card for your loved ones
