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Up-to-date information on how do gift cards work

A gift card is a universal gift that is becoming more and more popular year by year. This type of gift makes life easier for the giver, eliminating the need to figure out what to give. If everything is more or less clear with the gift card function, but how do gift cards work, what it is physically like, and what types of gift cards exist, we will try to answer these questions.

What is a gift card?

Gift cards are a 100% prepayment that the donor made to the store's account. The gifted person can choose any product for the amount indicated in the certificate, or make purchases more expensive by paying the price difference.

How do gift cards work?

Technically, the card is a document confirming the deposit of a sum of money into the store's account. The electronic card contains a code sent to the recipient by email. The donor himself chooses the day when the card will be received. This day will be considered the day of open-loop cards. The recipient receives the card by email. In the letter, a person receives a card, as well as for instructions with detailed information on its use. An important advantage of electronic card options over traditional ones is the lack of logistics costs. Also, what is very important, losing a gift card is almost impossible. The gift card is easy to use. In a word, the advantages of electronic cards are obvious.

Gift card types

The consumer value of a gift card depends on how large the scope of its application is and whether it meets the interests of the recipient. Gift cards broadly fall into three categories.
Open cards: maximum benefit for the buyer, but not interesting for brands. These cards are a complete replacement for “money in an envelope”. They are issued by banks in the form of a “one-time” payment card and do not belong to loyalty management tools. In addition, such cards are still rare.

Closed-loop gift cards: They are beneficial for the brand, but not for every customer. Branded cards are issued by the companies themselves to stimulate demand. You can exchange the face value of the card for goods only in a specific retail chain. If the buyer is interested in the products of the category, the card becomes an ideal gift.

Gift cards also differ in their physical form. Cards are digital and physical gift cards. Electronic cards are those that contain a digital code. And physical ones, this is a classic plastic card with a magnetic stripe.

Gift card features

Each brand pursues its goals with the help of gift cards. To achieve them effectively, it is necessary to create a gift card with specific functionality: set a limited or free denomination, limit the validity period, and determine the possibility of multiple or one-time use. Depending on the set properties, a gift card helps a business:

• Attract new clients. Gift cards often end up with people who have not previously been customers of the store.
• Find out customer preferences. When reading a gift card, it is possible to generate a report on the choice of the buyer.
• Raise the level of sales. Few of the gift card holders fit into the given face value. Either unused funds remain on the card, or the client chooses products for a large amount and pays the rest.
• Get free funds. When the client has purchased and paid for the card, and the goods have not yet been released, the company forms a fund of free financial resources.

In short, gift cards open up huge opportunities for buyers and sellers.