Understanding Gift Cards: Definition And Varieties

A gift card is similar to a prepaid debit card in that it includes a predetermined balance that may be used for various transactions. Gift cards purchased at a store are only redeemable at that store, whereas general-use prepaid gift cards may be used anywhere that accepts Visa, even at ATMs. Prepaid debit cards, such as those seen on gift cards, are another name for these cards, which are given to recipients as presents. You can split a gift voucher into two categories: open loop and closed loop. Both kinds may be utilised virtually and physically.

There is usually a low and high limit on how much money can be loaded onto most gift cards. One such range is from $10 up to $500. Gift cards are useable as partial payment for certain purchases, with other forms of payment such as cash, debit, or credit utilised for the rest of the total. Many gift cards provide the option of online registration, which enables the remaining balance to be monitored and frozen in the event of a loss. It makes certain gift cards more secure than actual currency.

Electronic Gift Cards With A Discrete Refund Process

Several retailers provide closed-loop gift cards that one can only use to encourage customers to shop at their establishments. Closed-loop cards often can only be used in-store or online with a single retailer. Gift cards that one may use at any of the stores owned by the same firm are more common. Commonly, there are no costs associated with activating closed-loop gift cards. In addition, these gift cards will only include the store’s logo rather than that of the processor so that they may double as advertisements for the retailer.

After the funds on a closed-loop gift card have been depleted, the card can no longer be used. Another potential downside of closed-loop gift cards is that their money may expire after a certain period. Wedding and baby shower closed-loop cards are commonplace in gift registries. Besides offering discounts to customers who sign up for their registries, several stores also provide free closed-loop gift cards as an incentive.

Gift Cards With An Open Loop System

Open-loop gift cards function similarly to cash, or more precisely like a credit or debit card, in that they may be used at any store that accepts that particular card, even online. All kinds of electronic payments may be made using these cards, which will have the payment processor’s logo. One further benefit of open-loop gift cards is that you may use them just like any other prepaid card. The user may typically reload these cards with more money at any time.

Online Gift Cards

Gift cards made their debut in 1994, per Mageplaza, a market for the comprehensive Magento e-commerce platform. Incentives to spend are becoming more important to retailers, and digital gift cards are a popular choice.

Luxury retailers like Saks Fifth Avenue and Bergdorf Goodman reward their most loyal customers with extra gift cards. Despite the rise of digital gift cards, a National Gift Card (NGC) industry study found that 75% of gift card program redemptions still use physical cards.


Store or online gift certificates are always welcome. One may buy a gift voucher to present to loved ones or earn as a reward for regular purchases. Avoiding penalties or losing a gift card due to expiration requires knowing how they operate and where they may be used. On the other hand, because gift cards are so popular around the holidays, it’s crucial to be vigilant about fraud at this time of year.

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