Gift Card Definition
A Gift Card is a prepaid stored-value money card that can be used instead of cash for transactions within a certain retail system.
The Gift Card is commonly released as a part of promotion strategies. Customers can not cash out those cards and in some cases can only use them within the preset expiry date.
Types of Gift Cards
Closed-loop Gift Cards
Closed-loop gift cards allow cardholders to buy some extra product from often only within a single retailer, either in-store or online. Usually, closed-loop gift cards can only be used once and during a certain period. This type of card is commonly released as a bonus for customers who have signed up for their registries.
Open Loop Gift Cards
Open-loop cards can be considered as the equivalent of credit or debit cards. These cards allow customers to use them in any retail system where they are accepted. The open-loop card also works as a standard prepaid card which allows customers to add funds. Customers sometimes will be required to pay an activation fee.
Digital Gift Cards
Digital Gift Card is the latest type of card and the most popular choice today. Instead of using physical cards, digital gift cards allow customers to purchase items on mobile phones
The benefit of Gift Cards
- Building brand awareness: The gift card promotion is a low-cost online and offline advertising tool that effectively raises public awareness of the brand.
- Interacting with customers: Gift cards support retailers to deeper customer engagement as well as cement the relationship between sellers and buyers.
- Generating useful data: Retailers are able to collect customer data by using gift cards. The collected data allow businesses to gain deeper insights and understand their market.
- Improving cash flow: While traditional promotions take time and money to produce results, businesses are able to sell gift cards in advance of selling new products or services.