GIFT CARDS: BUSINESS YOU SHOULD KNOW

 

Image credit: New York Post

 

 

Gift cards have become a staple of modern gift-giving, offering convenience and flexibility for both the giver and the recipient. From birthdays to holidays to special occasions, gift cards are a popular choice for those who want to give the gift of choice. But before you buy or use a gift card, there are a few things you should know to make the most of this versatile present.

 

What are Gift Cards?

 

Gift cards are prepaid cards that are issued by retailers, financial institutions, or businesses as an alternative to cash for purchasing goods or services. They come with a specific monetary value that the recipient can spend at the issuing retailer or at a network of affiliated merchants, depending on the type of gift card. Gift cards are commonly used for gift-giving purposes, allowing recipients to choose their own presents based on their preferences and needs. They come in various forms, including retailer-specific gift cards, prepaid debit cards, and general-purpose gift cards that are accepted at multiple locations.

 

Types of Gift Cards

 

Gift cards come in various forms, including:

 

Retailer-specific gift cards: These are issued by specific stores or brands and can only be used at their respective locations.

Prepaid debit cards: These function like regular debit cards and can be used at any merchant that accepts debit cards.

General-purpose gift cards: These are often branded with major credit card logos (e.g., Visa, Mastercard) and can be used anywhere those cards are accepted.

 

 

Terms and Conditions

 

Before purchasing or using a gift card, it’s essential to read the fine print. Pay attention to:

 

 

• Expiration dates: Some gift cards may have expiration dates, after which they become unusable. Make sure to use the card before it expires to avoid losing the value.
• Fees: Watch out for activation fees, maintenance fees, or inactivity fees, as they can eat into the value of the card over time.

• Usage restrictions: Some gift cards may have limitations on where and how they can be used. Be aware of any restrictions before making a purchase.

 

 

Activation and Registration

 

Many gift cards require activation before they can be used. Some also allow you to register the card online, which can protect your balance if the card is lost or stolen. Registering the card can also provide access to additional features, such as balance tracking and transaction history.

 

 

Treat Gift Cards Like Cash

 

Gift cards are essentially a form of currency, so it’s essential to treat them with the same care as you would cash. Keep them in a safe place and avoid sharing the card number or PIN with anyone else. If the card is lost or stolen, report it to the issuer immediately to prevent unauthorized use.

 

 

Unused Balances

 

 

If you have a gift card with a small balance remaining, don’t let it go to waste. Many retailers allow you to combine the balance of multiple gift cards onto one card, making it easier to use up remaining funds. Alternatively, you can use the remaining balance to purchase a small item and pay the difference with another form of payment.

 

 

Gift cards, in a nutshell, offer a convenient and flexible way to give the gift of choice, but it’s essential to understand their terms and conditions to make the most of them. By knowing the types of gift cards available, reading the fine print, and treating them like cash, you can ensure a

positive experience for both the giver and the recipient. So next time you’re looking for the perfect gift, consider a gift card—it’s the gift that keeps on giving!

 

 

 

Summary:

 

A gift card is a prepaid debit card that contains a specific amount of money available for use for a variety of purchases. There are two main types of gift cards: closed-loop and open-loop. Closed-loop gift cards are designed for use at specific retailers or merchants, while open-loop gift cards can be used at a wider variety of locations, including for cash withdrawals at ATMs. Gift cards can be purchased as standalone products or offered as part of campaigns, providing benefits such as increased cash flow, higher margin sales, and reduced fraud risk. They are popular for gifting due to their convenience and flexibility, allowing recipients to choose products or services within the designated amount.

 

 

Forms of Gift Cards

 

 

1. 1. Single Store Gift Cards: These are specific to a particular retailer or brand, allowing recipients to purchase items from that particular store.

 

 

1. 2. Family of Stores Gift Cards: These gift cards can be used at multiple stores within the same retail family, providing a broader range of options for the recipient.

1. 3. Multi-Store Gift Cards: These cards offer flexibility by allowing recipients to shop at various stores, providing a wider selection of products and services.

 

 

1. 4. Category of Stores Gift Cards: These gift cards are designed for use within a specific category of stores, such as clothing stores, tech gadget shops, or specialty food stores.

 

 

 

1. 5. ”Any Store” Visa and General-Purpose Gift Cards: General-purpose gift cards, like those issued by major credit card companies, can be used at multiple locations, offering recipients the freedom to choose where they want to shop or dine.

 

 

 

                        

TRADING IN GIFT CARDS

Trading in gift cards involves exchanging unwanted or unused gift cards for ones that you can use or sell. This can be done through various platforms and services that facilitate gift card trading. Gift cards trading involves the steps below:

1. Find a Trading Platform: There are online platforms and marketplaces specifically designed for buying, selling, or exchanging gift cards. Examples include Raise, CardCash, and Gift Card Granny.

 

2. List Your Gift Cards: If you have gift cards that you don't plan to use, you can list them on these platforms. Provide details such as the retailer, card value, and any applicable fees or restrictions.

 

3. Browse Available Cards: Conversely, if you're looking for a specific gift card or want to exchange your card for one from a different retailer, you can browse the available listings on these platforms.

 

4. Complete the Trade: Once you find a suitable trade or buyer, you can proceed with the transaction. This may involve sending your gift card information electronically or mailing the physical card, depending on the platform's policies.

 

5. Receive Your New Gift Card: After the trade is completed, you'll receive the new gift card or payment (if selling) based on the agreed terms of the trade.

 

6. Consider Fees and Terms: Be aware that some trading platforms may charge fees or have specific terms and conditions for trading in gift cards. Always review these details before engaging in any transactions.

 

Trading in gift cards can be a convenient way to turn unused cards into something of value that you can use or enjoy. However, it's essential to use reputable platforms and exercise caution to avoid scams or fraudulent activities. 

To trade in gift cards, you can use reputable websites like Raise and CardCash. These platforms operate as a marketplace where you can sell your gift cards to other users at a discounted price. Alternatively, you can sell your gift cards directly to these websites, and they will handle the reselling process for you. CardCash, for example, offers up to 92% of the cash value of your cards, while Raise charges a 15% fee for using their site to sell your card.

 

 

 

Guide against scams in Gift cards trading

To avoid scams when trading in gift cards, follow these tips:

 

 

1. Verify Payment Requests: Always verify payment requests through official channels before taking any action. Never use gift cards as payment to government agencies or companies.

2. Exercise Caution: Be skeptical of unsolicited emails or calls that claim you’ve won prizes, especially if they request gift card details. Contact the agency directly to verify any claims.

 

 

 

3. Avoid High-Pressure Tactics: Scammers often use urgency or high-pressure tactics to push for quick decisions. Be suspicious of any communication that

demands immediate action.

 

 

4. Secure Online Transactions: Ensure online transactions are done through secure and encrypted connections.

 

 

 

5. Use Credit Cards for Purchases: When buying gift cards, use credit cards that offer fraud protection. This adds an extra layer of security.

 

 

6. Report Fraudulent Activity: Make an official report for any fraudulent activity.

 

 

 

7. Prompt Usage of Gift Cards: Use gift cards quickly to minimize the risk of fraud or expiration.

 

 

8. Avoiding Online Gift Card Purchases from Unofficial Sources: Steer clear of buying gift cards from auction sites or unverified online marketplaces. Purchase gift cards directly from official retailers or their approved vendors.

 

 

 

9. In-Store Gift Card Purchase Safety: When buying gift cards from a store display, check for tampering, especially with the card’s PIN. Inspect cards carefully and avoid compromised cards.

10. Be Wary of Email and Phone Call Scams: Be skeptical of emails or calls claiming you’ve won a prize, especially if they request gift card details. Contact the agency directly to verify any claims.

 

 

 

By following these tips, you can minimize your risk of falling victim to gift card scams and fraud.

 

 

Payment options in Gift cards trading

When trading in gift cards, the payment options typically include cash, PayPal, or even another gift card, depending on the platform you choose. GC Buying, for example, allows you to sell your unwanted gift cards for any payment method, including cash, PayPal, or another gift card. CardCash, Raise, and other gift card exchange sites also offer various payment options, such as direct deposit or PayPal. It’s essential to read up on a site before transacting and look for a post-purchase guarantee to ensure cards are legitimate.

 

 

Gift cards geographical trading

 

 

Gift cards from different countries can have varying restrictions when it comes to redemption. For example, Apple Gift Cards and App Store & iTunes Gift Cards can only be redeemed in the country or region of purchase. However, some gift cards, like those from U.S. retailers, can be used in Canada and other countries.

 

 

When it comes to Visa gift cards, they can typically be used internationally, but it’s essential to check the terms and conditions of the specific card before attempting to use it abroad. Some restrictions may apply, including limited acceptance or additional fees for foreign transactions.

 

International trading platforms for Gift cards

If you’re planning to use a gift card internationally, it’s crucial to research the specific terms and conditions set by the gift card issuer to ensure it can be redeemed in the desired location.

To find a reputable platform to trade in gift cards from other countries, you can consider the following options:

 

 

1. Cardtonic: This platform allows you to sell your unwanted gift cards for cash swiftly and at any time. It has a responsive customer support team and offers the best gift card rates in Nigeria.

 

 

2. Paxful: This is a peer-to-peer platform where you can trade or sell your gift cards. It has a large user base, making it easy to find a buyer. However, it’s not 100% secure due to its peer-to-peer nature.

 

 

 

3. Gift card Granny: Although based outside Nigeria, this online gift card exchange platform supports bulk selling. However, reaching their customer support team may be challenging.

 

 

4. Cardcash: This online gift card marketplace partners with major brands like Amazon, Walmart, CVS, Uber, Starbucks, etc. It offers the opportunity to get paid in cash or perform card swaps for desired gift cards.

 

 

 

5. Facebook Marketplace: This platform allows users to buy and sell items, including gift cards. Prices are not fixed and can be negotiated. However, you are

selling to individuals, not Facebook, which increases the risk of getting scammed by a buyer.

 

 

6. Suregifts: This Nigerian gift card exchange platform is secure, but it may offer relatively low resale rates and be limited to local gift cards.

When choosing a platform, consider factors like reputation, security, payment options, customer service, and exchange rates.

NB.

Techcoa.com is not recommending any of the platforms mentioned in this blog post. Conduct your personal checks before adopting a platform for trading!

 

Fees and rates comparison in Gift cards trading

To compare fees and rates for gift card trading platforms effectively, consider the following tips:

 

 

1. Research Different Platforms: Research various gift card trading platforms to understand their payment options, security features, online reviews, and rates. Look for platforms that accept your gift card and offer favorable terms.

 

 

2. Choose Low-Fee Platforms: Opt for platforms with low trading fees to maximize your profit. Some platforms charge fees as high as 5-7%, while others have fees as low as 3%. Platforms like Prestmit offer transparent trading fees without hidden charges.

 

 

 

3. Look for Promotions and Bonuses: Keep an eye out for special promotions and bonuses from different platforms. These incentives can enhance your card rates and increase the value of your gift cards.

 

 

4. Compare Payout Rates: Different platforms offer varying payout rates, so it’s essential to compare prices across multiple sites to find the best deal. Check reviews and user feedback to gauge the reliability of each platform.

 

 

 

5. Check Gift Card Rates Online: Use rate calculators provided by gift card exchange companies to determine the rates they offer for different gift cards. These calculators help you compare prices on various platforms and make informed decisions before trading.

 

Advantages and Risks of Gift Cards Trading

Advantages:

• Increased Spending: Shoppers often spend more than the gift card amount, leading to increased sales for businesses.
• Reduced Fraud Potential: Gift cards can be partially redeemed without cashback, reducing the risk of fraud.
• Employee Recognition: Gift cards make it easy to recognize and appreciate staff, fostering positive behaviors and morale.
• Brand Awareness: Customized gift cards can improve brand visibility and serve as effective marketing tools.
• Convenience: Gift cards offer a convenient payment method for customers and can control employee spending.
• Sales Boost: Selling and accepting gift cards can boost sales by attracting new customers and encouraging purchases.

 

 

Risks:

• Unused Funds: Small remaining balances on gift cards can go unused, especially with expiration dates on closed-loop cards.
• High Fees: Some platforms charge high fees for purchases, reloading funds, and inactivity, impacting the card's value.
• Limited Purchase Power: Closed-loop cards restrict purchasing options to specific retailers, limiting the recipient's choices.
• Loss or Theft Challenges: Losing or having a gift card stolen can be costly, especially if not registered or the card number is unavailable.

In nutshell, while gift card trading offers advantages like increased sales and brand awareness, it also poses risks such as unused funds and high fees. Understanding these factors is crucial when engaging in gift card trading to maximize benefits and mitigate potential drawbacks.

 

Taxation in Gift Cards Trading

 

 

The tax implications of trading gift cards vary depending on the specific circumstances of the transaction. The following are some general guidelines:

 

 

1. Capital Gains Tax: If you use a gift card to purchase an item and later sell it at a profit, the profit may be subject to capital gains tax. The cost basis for the item would be the value of the gift card used to purchase it.

 

 

2. Gift Cards as Compensation: If a gift card is given to an employee as compensation, it is considered taxable income for the employee. The value of the gift card should be added to the employee’s gross income for the tax year when it is received.

 

 

 

3. De Minimis Gifts: The IRS allows small, non-cash gifts of minimal value to be excluded from taxable income. If the gift card value is $25 or less, it may not need to be reported as taxable income.

 

 

4. Employee Achievement Awards: In some cases, gift cards given as employee achievement awards may be exempt from taxation if they meet specific criteria set   by the IRS, such as being given for outstanding length of service or safety accomplishments.

 

 

 

5. Ǫualified Employee Discounts: If your company offers employees discounts on goods or services, the value of these discounts typically does not count as taxable