If you're one of the many people who find it difficult to select the ideal gift for your friend's wedding or your teenage nephew's birthday, gift cards can be a great alternative. There are different types of gift cards that can surely make anyone feel special.
Now, the question is, what is a gift card, and how does a gift card work? A gift card resembles a debit card in terms of design and functioning but is preloaded with cash. The Gift Card recipient can use the prepaid funds to make a variety of online and in-person retail transactions using electronic payments.
In the blog, you will learn about the various types of gift cards and how gift cards work. A gift card can occasionally be used to pay for a portion of a transaction as well. The money loaded on the card, however, cannot be withdrawn. It can only be used to make purchases by a person who has access to it with the card. The expiration period for gift cards provided by banks might be anywhere between three and twelve months. A person has to use the gift card to avail of benefits within that period.
An overview of the different types of gift cards
Based on acceptance, there are essentially three different sorts of gift cards. Let's find out a bit more about them and how these gift cards function.
- Network or open loop: Due to its affiliation with a certain network, such as Visa, MasterCard, American Express, or something similar, this type of gift card is frequently accepted. These Gift Cards can therefore be used everywhere that accepts the brand's cards. They have many advantages and are simple to use.
- Closed Loop: This can only be used for a small number of brands, or it is only accepted at specific locations. They are not preferred by everyone, but when used correctly, a person can avail of a lot of offers from them.
In addition to the ones mentioned above, there are two categories of gift cards based on replayability:
- Reloadable Gift Cards: Gift Cards that can be repeatedly filled with cash up until their expiration date, and these are easy to use whenever a person needs it.
- Non-reloadable Gift Cards: They can only be loaded once. Non-reloadable cards, however, occasionally become reloadable following a certain registration procedure with the issuing bank. These gift cards are used for specific purposes and can’t be used daily.
Gift Cards come in two varieties depending on the issuer:
- Banks and credit card providers: Banks frequently offer open-looped gift cards with possible administrative costs. However, you receive an electronic authorisation on the purchased Gift Card, which has an expiration date, with this. Such cards also offer the choice of reloading. If this type of card is used before the expiration period, the user can get many offers.
- Retailer, brand, or independent company: They typically provide gift cards as a method to keep customers loyal and grow their business. They are used as a medium to attract people towards their brand and to create a name in the market.
Why do customers prefer gift cards over cash?
Cash gifts might occasionally be inappropriate in India since the quantity given is considered. They can sometimes create a lot of issues between people. So, the gift cards offered by banks are a preferable option for customers. There are a few more factors that make gift cards superior to cash:
- They are safe and easy to use: Gift Cards can be registered online, making it possible to freeze them in the event of loss and preserve the remaining value.
- They are a convenient mode of gifting on special occasions: Gift cards are a practical method to allow young consumers to indulge within predetermined boundaries. For instance, mobile Gift Cards can also be sent via SMS or email. It is safer because the Gift Card will be linked to a specific phone number (the recipient's).
About e-gift cards: what you need to know
E-gift cards are offered by banks and can be sent to a person virtually. An e-gift Card is sent to the recipient through email by sending the card number and PIN that comes along with it. The PIN is also sent to the person who purchased it as confirmation of the recipient's email. After that, the person who has received the gift card can use it within the valid period. Like a conventional Gift Card, an e-gift card can be used for both online and in-person purchases based on the needs and convenience of the receiver. In the present time, e-gift cards have become a popular mode of gifting on special occasions to loved ones.
The wrap up
Gift cards can be simpler to purchase than thoughtful presents, but before you choose one, think about the person you're buying it for. The person should also be aware of who has gifted it. So, gift cards come with the sender’s name mentioned on them. The gift cards should also be unique so that your present can be recognised by the recipient.
Different gift cards may be linked to various brands. Gift cards come in a variety of forms and can certainly make anyone feel special. The recipient of the Gift Card can then use the prepaid gift card to complete a range of online and in-person retail transactions, utilising electronic payments.
When opening a Kotak Bank Digital Savings Account, you can avail of the gift card facility. 811 Zero Balance Savings Account holders can make the most of the E-gift cards, which makes it easier to purchase a gift card for someone special. This makes the facility a preferable option for the customers.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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