Gift cards are available at almost all retailers, whether online or brick-and-mortar, as a way to let consumers shop or give money to friends, both as a means of shopping and giving money. In general, the gift voucher can be either physical or digital (e-gift card), and each has its features and benefits, so buyers can choose which type is right for them.
It is helpful to understand how gift voucher compare with other payment methods, if you are planning to purchase them during the holiday season for others or yourself, or if you want to buy them for yourself.
Gift cards: how do they work?
There are various gift cards, but the most common type is the gift card, a form of payment used at retailers, gas stations, restaurants, and many other places. A gift card can be loaded with money, which you or the recipient can then use at an accepted merchant to spend the money.
A gift card can be either an open-loop gift card or a closed-loop gift card. In the case of an open-loop gift card, the recipient can use it at any location that accepts the particular brand of card. You may use a Visa gift card, for example, if it is branded with the Visa logo, to make purchases anywhere that Visa is accepted.
Conversely, closed-loop cards can only be used at specific merchants, whereas open-loop cards are accepted at all merchants. If, for example, you were to purchase a gift card from Starbucks or Amazon, it would be possible for you to use the card exclusively at the retailer who issued the card, and the recipient would not be able to use it at any other retailer.
Pros:
A gift card can be a great way to give someone a gift they will appreciate. Here are a few examples:
- Higher Average Order Value (AOV): Several studies have shown that the holders of such vouchers are more likely to spend than what they have on their credit cards. Business Wire reports that, on average, the amount paid by individuals is $59 more than the original value of their credit cards. It is, therefore, not only possible for you to attract new customers to your store, but you can also increase your profits.
- Increased brand awareness: Business cards are well known to be among the best ways to promote a company’s products and services. It is important to note that companies that offer different kinds of cards for different occasions utilise viral marketing to the fullest extent possible, as well as having the opportunity to promote their brand via one of the most effective marketing channels, word of mouth.
- Fueled customer loyalty: A gift card becomes more effective when paired with a loyalty program that offers many benefits. With the advent of personalised offers and deals, we live in an era of mass marketing becoming less and less effective. Most shoppers love the idea of shopping for more valuable, one-of-a-kind products. As a result of such deals, a brand becomes more memorable, its credibility is increased, and customers are more likely to stay with it.
Also read: Why You Should Buy Amazon Pay Gift Cards
If you are unsure what to buy for someone on your gift list and don’t know what to buy them, you might want to consider giving them a gift card since they give them the flexibility to opt for what they want and when they need to buy it. If you choose closed-loop gift cards over open-loop ones, it is essential to keep in mind that this limits the giftee’s options for where the cards can be used if you choose closed-loop cards.