The present economic climate, marked by high inflation, rising fuel costs, and the possibility of a recession, has consumers seeking ways to maximize the value they get from their purchases and being careful about how and where they invest their money.
Because of this, digital gift cards have the potential to save the consumers’ money in this day and age, more so than ever before.
Customers who use gift cards are eligible for various freebies, Cash Back, and discounts at various retail and dining establishments.
In addition, people who shop with gift cards statistically have a higher likelihood to spend more than the value of their gift cards, and they may even return to the store more than once to do so. As a result, savvy retailers understandably want to cater to these customers, as they promise a significant source of revenue.
Nearly all online and offline stores provide customers with the option to purchase gift cards, which may be used to make purchases or to present money to family and friends. In addition, there are physically delivered gift cards and electronic gift cards (also known as e-gift cards), and both kinds come with a wide variety of features and advantages.
Let’s understand how gift cards compare to other forms of payment— whether you are thinking about buying gift cards for other people during the holiday season or if you are interested in purchasing gift cards for yourself—benefits you in different ways.
What Is a Digital Gift Card?
A gift card is a reloadable plastic card that may be used as a form of payment at many different stores and services, including supermarkets, restaurants, and gas stations. You or the recipient may then utilize the card’s accumulated balance to purchase at participating merchants.
As far as gift cards are concerned, there is also the possibility of a closed-loop system. You can use open-loop gift cards at any store that accepts that brand of card. In this way, you may shop anywhere that takes Visa with a gift card with the Visa logo, for example.
Where you can only use the closed-loop card at certain stores, gift cards bought from Bloomingdale’s or DoorDash can only be redeemed at those stores, but purchasers may earn up to 5% Cash Back on their purchases (depending on their offers). This applies to both the purchaser and the receiver of the gift card.
Receive Cash Back On A Gift Card
When it comes to open-loop gift cards, it is not possible to retrieve more than 90% of the value; however, with closed-loop cards, this does not hold good. Instead, the value of a gift card with a closed loop is determined by factors such as how popular the card is, how much demand there is for it right now, and when it will expire.
For instance, consumers who buy at Sephora and spend $50 on products are eligible for a complimentary makeover. Therefore, if you give a friend or family member a Sephora gift card worth $50 or more, that person will be eligible to get a free makeover when they redeem their gift card. Also, you can avail about 4% Cash Back on Sephora eGift Cards.
Redeeming a gift card may give you more value than Cash Back, depending on the card.
Closed Loop Gift Cards
First, exchanging it at a gift card kiosk will get you your new card.
- The kiosks, which resemble bank ATMs and are generally seen outside of prominent supermarkets, allow customers to purchase gift cards. You simply need to place your gift card into the machine and then wait for it to determine an approximate value for your card.
- After that, it will make a deal with you in which you may get a discount on your gift card. Unfortunately, your gift card may also be declined at the kiosk if a company issues it with a limited market reach.
- You may use Apple or Google Maps to discover a gift card kiosk near you, but be aware that not all cities have them.
- You may liquidate either open-loop or closed-loop gift cards by selling them locally or online; however, achieving a decent value for the card will require patience.
If you are in immediate need of cash, you could be forced to sell your gift card to local stores or pawnbrokers for sixty percent of its value or less. If time is not a constraint, you may put the card up for auction on the internet at your chosen price; however, you should be aware that this may cause you to lose a portion of the proceeds to commission fees. Websites specializing in classified advertisements are among the most common venues for the online sale of gift cards.
Advantages of Using Gift Cards
Take a look at some of the advantages Cash Back gift cards provide to the consumers.
- If you prefer not to use cash or a credit card as a means of payment, they might be an excellent alternative option for you to consider.
- A gift card is a thoughtful option for every occasion, including holidays, birthdays, and anniversaries.
- Keeping track of your spending may be easier with gift cards (helpful for avoiding bank overdrafts).
- They are generally straightforward and user-friendly.
If you have no clue what to get for someone on a special occasion, you can consider buying them a gift card instead of an actual present, since the card gives the recipient the option to decide what they want to buy and when they want to buy it.
However, it is essential to remember that selecting closed-loop gift cards rather than open-loop gift cards will restrict the recipient’s choices on where they can utilize the gift cards.
It has been predicted that traditional debit and credit cards, airline miles, and cryptocurrencies will all be included in consumers’ digital wallets in the future. It is said that the scenario would “make currency ubiquitous” if it came to pass. But, of course, gift cards would be one component of these wallets.
People believe that “we are already swiftly heading toward this reality” and cited that 88% of customers use some digital wallet as evidence. Furthermore, “by the end of 2022, atypical payment methods will account for fifty percent of all digital payments.”
Gift cards will play an essential part in the emerging method of payments for earning more Cash Back and giving consumers the freedom to save more money while buying what they desire.