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Gift cards are a great addition to any company, and they even come with some built-in marketing advantages.
There are two different kinds of gift cards that could help you get started, but you should do your research before selecting one.
Carrying gift cards at your store will undoubtedly be advantageous to you, regardless of the type of store you run or the size of your enterprise.
Why? Gift card users typically spend more than non-users. Gift cards are also popular since they are easy and convenient to use, making them thoughtful gifts that the receiver will definitely appreciate.
Benefits Of Gift Cards for Businesses
Gift cards are suitable for both small and big businesses. They are used by small businesses to drive in new customers and promote customer loyalty.
Customers can buy gift cards for a variety of reasons, including gratitude, thank-you notes, birthdays, graduations, and other special events.
- It helps to increase sales and revenue.
- Aid in boosting customer traffic to businesses.
- Get new consumers.
- Boost employee engagement.
What Are Open Loop Gift Cards?
Open loop gift cards are simply referred to as gift cards that are widely accepted. They work everywhere as long as the merchants accept credit cards, just like them.
Usually, the store’s name is shown next to the Mastercard or Visa logos. The gift card issued by American Express is a good example of an open loop gift card.
Pros of Open Loop Gift Cards
- They are treated like cash substitutes.
- As long as the retailer accepts their processors, they can be used anywhere.
Cons of Open Loop Gift Cards
- They normally require an activation fee for the user or purchaser.
- Although this is less often as technology is changed, older credit card terminals occasionally place “hold” or “pre-authorization” amounts on cards, which can be problematic with gift cards.
- There is a limit on where gift cards can be used. This means you may not gain profit benefits other than the activation fee.
What Are Closed Loop Gift Cards?
Closed loop gift cards are retail-specific i.e they belong to a particular store and can only be used for the provider. Many brands go for closed loop gift cards as a marketing strategy to promote retention. Some of them include Apple gift cards, Steam gift cards, Nordstrom gift cards, etc.
Another type of closed-loop gift card is one that can be redeemed at an affiliate or sister company of a company. The gift card from Footlocker is one illustration of this. Along with Footlocker, Champ Sports, and Eastbay also accept Footlocker gift cards for purchases.
Pros of Closed Loop Gift Cards
- No zero activation fee is required.
- They ensure recipients of the gift card return to your business to use it.
- They promote customer loyalty.
- They help businesses to make money on the products bought using gift card.
- Gift cards bought but never used generate revenue for the company ( different laws regarding unused gift cards for each state).
- Since many customers spend more than the value of the gift card allows, business revenues rise.
Cons of Closed Loop Gift Cards
- There is limited flexibility.
- They might not be redeemable if the recipient isn’t close to any of the stores.
For instance, what would you do if you received an Amazon gift card while visiting the United States for the holidays but promptly forgot about it? When you returned to Nigeria, you discovered it in your wallet.
There is still hope; although it would have been ideal to use the gift card in-store, this is not possible. As a result, you might have to sell the Amazon gift card on a reputable trading website in order to avoid losing it.
In a case where you have no choice but to sell your gift cards for cash, your ideal platform is Nosh. The mobile app is available for download on both Playstore and Appstore. You can also choose to trade on the website.