Gift cards make buying goods and services convenient, but did you know that digital gift cards are even more practical than the standard plastic branded gift cards?
Gift cards can be a wise choice if you’re one of the many people who struggles to choose an item for a friend’s wedding or your teenage nephew’s birthday.
I’m going to go over how gift cards operate, their advantages and disadvantages, some ways to get gift cards for free, and other information about digital gift cards that you should know in this article.
About Gift Cards
Prepaid money cards known as gift cards are an alternative form of payment for goods and services. They are used in retail establishments, dining establishments, and pretty much everywhere else that accepts them.
But today, our attention will be on digital gift cards.
How Does a Gift Card Work?
Customers can purchase gift cards to use themselves or to give as gifts to loved ones. Cards can be used in-store, just like a credit card, and balances can be deducted when you make a purchase.
Payments are gathered by the merchant at the point of sale after cards are swiped through conventional credit card terminals and POS systems.
Open-loop or closed-loop gift cards are both acceptable. Anywhere that brand of card is accepted, you can use an open-loop gift card. You could use a gift card bearing the Visa logo, for instance, to make purchases wherever Visa is accepted.
On the other hand, a closed-loop card is restricted to use at particular retailers. For instance, if you buy a gift card from Starbucks or Amazon, neither you nor the recipient of the gift card can use it anywhere other than the store that issued it.
POS Systems That Support Gift Cards
Gift cards can be used with many POS systems. Here are a few of our favorites.
Lightspeed Retail POS
Gift cards can be created and purchased through a third-party gift card vendor, but Lightspeed Retail POS allows you to accept them. The barcode on the cards must be printed using EAN-13 or UPC-A standards in order to be compatible with the Lightspeed POS system, even though you can use any third-party vendor.
If you’ve enabled Lightspeed eCommerce, Lightspeed will accept both physical and digital gift cards. Customers can use their gift cards from this POS both online and in-store, regardless of whether they are physical or digital, which is another benefit. The email that Lightspeed sends to people who receive gift cards can only be slightly customized, which is a drawback. While customers who purchase gift cards online can choose the image that will appear in the email containing the gift card, the email’s text cannot be altered.
Everything you require for in-house gift card sales is included in Square’s POS system. Physical gift cards with your logo and your choice of background template can be purchased from them starting at 80 cents each, or you can create your own. Magnetic stripes are present on the reloadable gift cards. Digital gift cards are also provided by Square. Digital gift cards can only be sold online; physical gift cards cannot be sold online. Square charges 2.9% plus 30 cents or 2.6% plus 10 cents for each gift card purchased online or in-person.
Digital Gift Cards
E-gift cards and ecodes are other names for these. These electronic codes are ones you can purchase online and have emailed or texted to you.
These codes are distributed by retailers, banks, or appropriate locations (such as restaurants), and they can be redeemed anywhere that does so. They are employed to make product or service purchases.
Popular gift cards that can be used in the right stores include digital gift cards like Apple, Steam, and Google Play gift cards.
A few digital codes can only be redeemed online, so keep that in mind.
Physical Vs. Digital Gift Cards
Gift cards can be either physical—that is, a plastic card—or digital. Instead of having a physical form, digital gift cards are issued to you in the form of a special gift code number that can be redeemed for purchases at online stores. The most common type of gift cards is still physical cards, but that is likely to change soon.
Customers have the option of buying physical cards from retailers like Amazon, Walmart, and Target as well as loading their online or digital accounts with money. Customers can also purchase digital and physical gift cards from large restaurant chains like Starbucks, Chipotle, and Chili’s. Customers can easily use these cards to pay for their meals and drinks using an app or in-store card reader to expedite the checkout process.
Starbucks Gift Card
Chipotle Gift Card
Chili’s Gift Card
Codes for digital gift cards can also be kept inside a mobile wallet app like Google Pay, Apple Pay, or PayPal’s Venmo. When you’re ready to complete your purchase, choose your digital gift card as the payment method of your choice.
Pros of Digital Gift Codes
- Freedom to choose:
Digital gift cards give you the freedom to choose whatever you want to buy within the limits of the card’s predetermined value, just like all other types of gift vouchers.
- More convenient:
They are more practical because the information is on your device and available whenever you need it, rather than being physical cards you have to carry around.
- They cannot be lost:
The digital codes are ordered online and sent to your email address or phone number (whichever is provided), and the details can be easily accessed through your device and the contact information provided, in contrast to the physical cards, which you can lose.
- You can resell them for cash:
The ability to exchange your Egift card for cash through gift card trading platforms is real. Quick and easy, the process.
Cons of Gift Cards
There can be some drawbacks to using gift cards. Here are five.
- A gift card may have some remaining funds after purchases are made; if this money is not used, whether from forgetfulness or inertia, it is money wasted.
- To add money, you can pay reload or purchase fees.
- Cards with closed loops have a lower buying power.
- Losing a gift card or having it stolen can be a headache, especially if you have failed to register it or keep the gift card number.6
- Failure to use your card could result in an inactivity fee being assessed.
Examples of Gift Cards
Visa Gift Card
Amazon Gift Card
Bestbuy Gift Card
Apple Gift Card
Google Play Gift Card
Shopify Gift Cards
And so much more!
How to Get Free Gift Cards?
Although we’ll get to that in a moment, shopping isn’t the only way to get free gift cards. Here are a few methods for obtaining rewards without having to pay any money. Online surveys can earn you free Gift Card Codes.
Paying for online surveys isn’t going to make you rich or even help you pay the rent, but it is a simple way to get free gift cards without putting much effort into it. Make sure to completely fill out your profile when you first register for each site to make the most efficient use of your time.
By doing this, you can be sure that you’ll only receive surveys that are personally relevant to you and that you won’t waste time answering questions to qualify for a study only to find out you’re ineligible.
InboxDollars is currently offering a $5 sign-up bonus for new members. With over 7,400 reviews, the site has a 4-star Trustpilot rating and is free to join.
The majority of the surveys at InboxDollars take 3 to 25 minutes to complete and pay between $0.50 and $5 each, according to their website. On occasion, if you fit the study’s demographic profile, you can find surveys with payouts of up to $20.
You can ask for payment via PayPal, a check in the mail, or free gift cards once you reach the $30 minimum payout threshold. The American Humane Society, the Red Cross, or any other charity of your choice can receive the money you donate.
Unlike some other survey sites that offer multiple ways to earn points for free gift cards, Survey Junkie focuses solely on paid online surveys. You as a user will especially appreciate the straightforward, user-friendly platform that is provided.
You won’t be inundated with choices when you sign up for Survey Junkie or forced to watch numerous videos or play numerous games for small sums of money. Each survey that is available displays the payout and the anticipated completion time. Points will be added to your account right away following the completion of the questionnaire.
To redeem your rewards, you must have at least 1,000 points, which are worth $10. You can select a gift card, send your money to PayPal, or deposit it directly into your bank account.
MyPoints users can earn points for participating in online panels, completing surveys, and testing products from home. When you register for a free account with them and make a $20 or more purchase using their online store, you can get a $10 sign-up bonus as a new customer.
By registering for SurveyMail, MyPoints will deliver surveys right to your inbox. Every time you click and complete a survey, you’ll gain points.
Depending on how long the survey is, you may be able to earn anywhere between 50 and 600 points total. Additionally, you can receive up to 750 points for every friend you refer and 5 points for each profile question you correctly answer.
The minimum number of points you need to redeem is 480, which will get you a $3 gift card. Depending on the retailer and free gift card value, there are different redemption requirements. For instance, the requirement for a $10 gift card from retailer A could be 1,400 points, while the requirement for retailer B could be 1,580 points.
According to its website, PrizeRebel has paid out over $19 million in prizes and free gift cards since its inception in 2007. Over 500 different gift cards and rewards are currently available.
By completing daily challenges, watching videos, participating in surveys, and signing up for partner company offers, PrizeRebel members can earn points that can be exchanged for gift cards. Points are immediately added to your account after a task is completed. You can redeem your points for free gift cards to stores like iTunes, Gap, Xbox, and Kroger.
Additionally, you can enter drawings for bigger cash prizes using your points.
How Are Gift Cards Better Than Cash?
Giving cash in India can occasionally be inappropriate because gifts are judged by their value. There are a couple of more reasons why one should choose a Gift Card over cash:
- Safety! Gift Cards can be registered online, making it possible to freeze them in the event of loss and preserve the remaining value.
- Convenience! Gift cards are an easy way to give young consumers some leeway within predetermined parameters. Additionally, mobile Gift Cards can be sent via SMS or email and are easily stored in a mobile phone. It is safer because the Gift Card will be linked to a specific phone number (the recipient’s).
Prepaid Credit Cards Vs. Gift Cards
Understanding the differences between gift cards and prepaid debit or credit cards is crucial when weighing the advantages and disadvantages of using them.
While you could buy gift cards to give away, prepaid credit cards are something you might use yourself for everyday spending if you don’t have a bank account or would prefer not to use cash or a regular credit card. Both can be used to make purchases in stores or online.
The ability to purchase and reload cards at retail locations is provided by prepaid credit card providers for a number of cards. For instance, the PayPal Prepaid MasterCard makes it simple for users to transfer funds between their PayPal account and a physical card that can be used anywhere MasterCard is accepted.
Compared to retailer-specific gift cards, prepaid credit cards, debit cards, and reloadable gift cards typically offer better value; however, regular credit cards can also have advantages when it comes to earning rewards on purchases or utilizing card-specific features, like travel incentives or rewards bonuses.
Consider the impact on your credit score when deciding whether to make purchases with prepaid credit cards or gift cards. Since you aren’t borrowing money with these kinds of accounts, they aren’t considered loans and won’t appear on your credit reports. This implies that they have no impact on developing your credit history.
A regular credit card can help you if you’re looking for a way to start or improve your credit. Your credit score can increase over time if you make on-time payments every month, keep your balances low, keep open older credit card accounts, and don’t apply for new credit too frequently.
Do Gift Cards Help Small Businesses?
Gift cards for small businesses aid in customer acquisition. They serve as a means of attracting new clients and retaining existing ones.
A gift card gives a customer a reason to come in if they haven’t before. You can encourage them to return frequently once they’re inside the store. Additionally, well-designed gift cards will have your brand prominently displayed on the front and/or back, reinforcing the identity of your company every time the recipient sees the card.
Even if a gift card recipient is an existing client, receiving a gift card can serve to remind them of why they enjoy doing business with you and encourage them to come in as soon as possible.
How Do You Start a Gift Card Program?
Physical Vs. Digital Gift Cards
Pick first whether you want to use actual gift cards or digital ones. Physical gift cards give customers something to give the recipient and also act as ongoing marketing for your company, but they are more expensive and challenging to implement.
Digital gift cards are becoming more and more common, particularly in light of the COVID-19 pandemic, and are simple to use for online stores. These gift cards cost less and are simpler to set up.
You will require a POS system that supports gift card transactions no matter what kind of gift card you decide on. This article will walk you through the process of setting up both physical and digital gift cards step-by-step.
Setting Up Physical Gift Cards
- Examine gift card sellers. This could be the provider of your POS system, a merchant bank, or a third-party gift card seller. So that you can use your branding and make the gift card appealing to customers, look for a provider that offers custom options.
- Prior to designing and ordering cards, select a provider. When your cards arrive, display them and start selling them. You will typically have to activate the gift card for the customer after it is purchased.
- Make gift card policies and educate your staff about them. It also covers any restrictions you have placed on them, how new gift cards are added to the system, how they can be redeemed, and how to advertise them to customers. Make certain that your policies adhere to all applicable state and local laws. Federal law, for instance, forbids companies from charging inactivity fees unless a card has been inactive for at least a year or selling gift cards with expiration dates of less than five years.
Setting Up Digital Gift Cards
- Create digital gift cards in the dashboard of your POS system. You might be able to set up digital gift cards without paying anything, or you might have to pay a monthly fee, depending on your POS provider.
- Create a proper setup for your e-commerce site. Make sure you have the ability to both sell and accept gift cards.
- instruct staff members on accepting gift cards. They must either enter a special gift card number or scan a printed or digital barcode. A gift card feature in your POS system should be explained to all employees.
You typically have to pay a payment processing fee when customers buy gift cards, just like you would for credit card transactions.
Gift cards are generally excellent marketing tools for building your brand. To be successful, they must, however, also be given promotions.
Customers adore gift cards, and they can purchase exactly what they want in the store using them in a very simple and convenient way. Gift cards are also great for you as the merchant because they will increase your sales and cash flow.
With the quick development of technology, using digital codes to make purchases has become much easier and more popular because, after all, who doesn’t want a simpler life?
The world is changing, and technology has simplified nearly every aspect of our lives, including giving gifts, shopping, and using services.
Can You Use a Gift Card to Buy a Gift Card?
One thing retailers selling closed loop gift cards need to be aware of is that gift cards are recorded in the retailer’s accounting as a liability rather than a sale. To put it another way, using a closed loop gift card to buy a closed loop gift card raises revenue recognition issues for small business owners and is, in our opinion, something that should be avoided.
Can You Use a Credit Card to Buy a Gift Card?
When you set up gift card processing for your company, you can accept any form of payment for gift cards, including cash, credit cards, and NFC-based payments like Apple Pay, as long as it has been approved by your processor, like Lightspeed Payments.
How Do I Create and Design My Gift Cards?
Similar to how many business owners order custom business cards online, most gift card suppliers allow you to upload your artwork or customize gift cards with pre-made designs via a web page or online portal. After creating your gift cards, you can either call your supplier to place an order or make a request through their website.