Types of Gift Cards in Nigeria [2022]

Types of Gift Cards

There are two types of gift cards: the open loop card and closed loop card.

An open-loop card is a general-purpose charge card that can be used anywhere that brand of card is accepted e.g the Visa gift card.

While the closed-loop card on the other hand is a card that can only be used at a specific retailer or merchant, which often the issuing merchant.

The term “Open-loop” is commonly used in the gift card industry.

As opposed to “closed-loop” gift cards that are issued by merchants such as Amazon, Target, Sephora and others.

The “open-loop” cards are issued by banks and credit card companies such as MasterCard, American Express, VISA and Verve.

In simple terms we can refer to open loop cards as bank credit and debit cards which can be used on different merchant machines.

The open loop card has a higher monetary holding capacity than the closed loop cards.

This implies that, a VISA dollar card can hold up to a million while gift cards (closed loop card) cannot hold same amount.

A closed-loop card is an electronic payment card that a cardholder can only use to make purchases from a single company.

A closed-loop card, also called a single purpose card, usually will have the company’s logo on it, indicating where the card can be used.

Amazon store gift card, Apple i-tunes gift card, steam gift card, Nike gift card, our local retail store’s gift card, and many others fall under the closed-loop card.

Mobile gift cards are delivered to mobile phones via email or SMS, and phone apps allow users to carry only their cell phone.

Virtual gift cards are delivered via email to the recipient, the benefits being that they cannot be physically lost and that the consumer does not have to spend the additional time needed to buy a physical gift card in a store making it more convenient.

Gift cards of this type can also be purchased quicker, which is especially attractive if an unplanned gifting occasion is on the horizon.

Other companies have introduced virtual gift cards that users redeem on their smartphones. As the merchant is not involved in the loop, it is considered a cash transfer rather than a traditional gift card.

A gift card may resemble a credit card or display a specific theme on a plastic card the size of a credit card.

The card is identified by a specific number or code, not usually with an individual name, and thus could be used by anybody.

They are backed by an on-line electronic system for authorization. Some gift cards can be reloaded by payment and can be used thus multiple times.

Cards may have a serial number, barcode, magnetic strip, which is read by an electronic credit card machine.

Many cards have no value until they are sold, at which time the cashier enters the amount which the customer wishes to put on the card.

This amount is rarely stored on the card but is instead noted in the merchant’s database, which is cross-linked to the card ID.

Gift cards are designed for different uses, which includes but not limited to, holidays, special occasions, sports teams, cartoons.

The popularity of Amazon Gift cards, Apple iTunes gift cards, Steam gift cards, eBay gift cards, Walmart gift cards, and Macy gift cards, have increased over the years with the need for people to buy from different countries.

 

Read Also: How to Get FREE Gift Cards in (2022)

Uses of Gift Cards

Closed loop gift cards can be used to make purchases at retail stores, gas stations, restaurants, and other locations where the issuing merchant is operative or have authorized to accept the cards.

Some commonly used gift cards include Grocery gift cards, Shopping or mall gift cards, Gas cards etc.

Although traditionally gift cards are issued by businesses in order to generate additional direct sales, these cards are also being used as a promotional tool or as part of a customer rewards system.

Gift cards can go a long way in introducing your new brand in an established market or in rewarding some of your most deserving customers.

Moreover, with the availability of wholesale gift cards, it’s possible to design a card rewards system that is affordable and provides lasting value.

Below is a list of some of the functions of gift cards.

Functions of Gift Cards

  1. Attract new customers: Gift cards are usually effective at a business accepting credit cards for products or services that most people want or need at an electronics store, which carries higher-priced items that many customers wouldn’t normally buy. Gift cards encourage people who might not otherwise visit your business to take a look around. This may result in future returns to make additional purchases.
  2. Increase brand awareness: Most if not all gift cards are designed to match the company logo and brand. This essentially works as a marketing tool in the customer’s pocket. As people purchase more gift cards to give to their friends on birthdays and holidays, your brand continues to be dispersed among new customers.
  3. Improved sales: Although gift cards are often set to a specific amount, many customers will end up spending more. The gift card encourages customers to enter the store and browse products. Once they’ve started shopping, it is likely that they’ll end up finding a product that costs slightly more than the gift card’s value. Paying only a fraction of the price is still better than paying in full, and your customer will leave satisfied.
  4. Reduce fraud: The use of an electronic gift card allows for partial redemption, leaving the rest of the balance stored on the gift card and eliminating cash backs. You can also use gift cards for store credit, helping to reduce fraud that occurs when customers try to make expired returns for cash. Issuing gift cards in place of cash encourages more sales.

 

Read Also: Best App to Redeem Gift Card in Nigeria (2022)

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