What is a Gift Card?
A gift card is an alternative to the money we carry normally given to someone as a present. The card is not linked to any bank account and only for spending. As a result, you can’t reload the card as well as take the cash out.
However, gift cards can be used as an alternative to cash. You can purchase products or services with a gift card if it has sufficient balance in it. You can also exchange gift cards with others or handover the card to them instead of giving cash.
There are normally two types of gift cards available. Those are-
1. Retailer Gift Cards
2. Universal Gift Cards
Retailer Gift Cards
Online or chain stores or restaurants normally issue retailer gift cards. These cards are only accepted to the specific retailer who has issued the card. For example- you can’t use a McDonald gift card in a Zara shop.
These cards are also called as Close Loop Cards. The reason is- no matter how many times the card is given to others, in the end, it must come to the same retailer who issued it. Thus, the loop ends where it started, just like a closed loop.
Retailer gift cards are inserted in the algorithm of the retailer’s accounting system. As a result, only the system of the specific retailer recognizes the cards, and you can use the card there. A retailer gift card is generally sold in the physical shops of the retailers. Besides, they can use 3rd party websites or own websites to sell the cards.
A retailer gift card is normally sold at a lower price than the price written on it. For example- a retailer gift card with a value of $100 may be sold for $90-$95. You may think that this may cause a loss to the retailer, but the effect is the opposite. It makes revenue bigger by increasing the sale.
People buy these cards as they offer more value than they cost. Won’t you buy something for $95 if you know that it’ll provide you a value of $100 or more?
Universal Gift Cards
Universal gift cards are offered by banks or other financial institutions. These cards can be used anywhere. Thus, these are not part of a closed-loop. You can use universal gift cards after purchasing something from a retail shop or store or other places.
A universal gift card is just like a prepaid bank card, which you can buy for a certain amount of money and use it for purchasing things. But the difference is- prepaid cards are reloadable but gift cards are not reloadable. Once the amount is spent, you’ll have to buy another gift card.
As the cards are not linked to any bank account, they allow you to perform an anonymous transaction. Normally you won’t find a gift card online as the cards are sent by mail to the address provided. You’ll find these cards in grocery shops or office supply stores. In these cases, you’ll get the advantage of maximum anonymity.
But now you’ll find many websites are providing gift cards and you can purchase those online. But in such cases, you can’t get the anonymity because they require personal information. They need the information because they need to make sure that you are a citizen of that country. Besides, in the case of purchasing gift cards online, you have to pay an extra delivery fee.
You can buy a gift card by visiting stores or surfing websites. But if you are looking for as anonymity as possible, I suggest buying cards by visiting stores.