Gift card

Gift card is a prepaid stored-value money card, usually issued by a retailer or bank, to be used as an alternative to cash for purchases within a particular store or related businesses. Gift cards are also given out by employers or organizations as rewards or gifts. They may also be distributed by retailers and marketers as part of a promotion strategy, to entice the recipient to come in or return to the store, and at times such cards are called cash cards.

Gift cards come in two main types: physical and digital. Physical gift cards are usually made of plastic or a similar material, and can be used at traditional brick-and-mortar locations. Digital gift cards, also known as e-gift cards or electronic gift cards, can be redeemed online and are delivered via email or a mobile app.

History

The concept of a gift card is believed to have been pioneered by Blockbuster Entertainment in the late 1990s as a replacement for their previously used gift certificates. The move was aimed at reducing fraud and providing a more convenient gift-giving option. Since then, the gift card market has grown exponentially, with both the variety and the functionality of cards expanding.

Advantages and Disadvantages

Advantages

• Convenience: Gift cards are easy to purchase and can be a convenient gift option, especially for last-minute shoppers.
• Flexibility: Recipients have the flexibility to choose their own gifts, reducing the risk of unwanted presents.
• Budgeting: Gift cards can help people stick to a budget, both when giving and receiving gifts.

Disadvantages

• Limited Use: Some gift cards can only be used at specific locations or online platforms, limiting the recipient's options.
• Fees and Expiration: Certain gift cards come with fees or expiration dates, which can diminish their value or lead to unused balances.
• Loss or Theft: Physical gift cards can be lost or stolen, and if not registered, may not be replaceable.

Regulation

In many countries, gift card practices are subject to regulations. In the United States, for example, the Credit CARD Act of 2009 places restrictions on expiration dates and fees associated with gift cards. Other countries have similar laws designed to protect consumers.

Market

The gift card market is a significant segment of the retail industry. It includes a wide range of sectors such as restaurants, department stores, and online retailers. The market has seen steady growth, driven by the increasing popularity of digital gift cards and the convenience they offer.

Environmental Impact

The production and disposal of physical gift cards have an environmental impact, including the use of plastic and other materials. Some companies are addressing this issue by offering digital alternatives or using recyclable materials for their physical cards.

See Also

• Credit card
• Debit card
• Electronic money
• Mobile payment