Whether individuals are looking to send someone a present or just want an easy way to pay for an online purchase, they may consider buying an e-gift or virtual gift card.
This article includes tips, suggestions and general information. We recommend that you always do your own research and consider getting independent tax, financial and legal advice before making any important decision.
They can save shoppers the time of travelling to a shop simply to purchase a physical gift card. They can also make it possible to send a recipient a gift from their favourite brand even if there's no store near the buyer.
This article explores what e-gift or virtual gift cards are, how they work, and some of their potential benefits and drawbacks.
Gift cards can come in two forms: a physical one on a card or a piece of paper, or a virtual card that is ordered online. Currency or store credit can be stored or loaded onto both types of cards.
In the UK, gift cards can be considered 'closed loop,' which means that the retailer which issues the card also redeems it. In other words, individuals generally cannot use the card anywhere except where it was purchased.
On the other hand, some gift cards may be 'open loop' or 'semi-open,' which means the credit can be spent in several, predetermined retailers. Learn more about different gift card types via the Gift Card & Voucher Association.
Both physical and virtual gift cards can include an expiration date or associated fees for inactivity, so it's important to read the fine print before purchasing one.
Physical gift cards exist in a tangible paper, plastic, or card form and usually have to be purchased in person from a physical store. Individuals can carry this type of gift card around in their wallet or purse and use it to pay for purchases when they’re at a shop or shopping online.
The process for using a physical gift card may vary depending on the gift card issuer and the store that it's being used at.
If shopping in store, individuals may hand over the card at the point of purchase. If the amount owed is more than the balance on the gift card, they can pay the remaining balance in cash or card. If the amount is lower than the gift card balance, they can retain the remainder to spend at another time.
When shopping on a merchant's website, individuals can input the code or gift card number as the payment method during checkout.
If there are remaining funds on the card after purchase, they can keep the physical card to redeem it later.
If someone loses a gift card, they may not be able to get the funds back.
An e-gift or virtual gift card works in a similar way to a physical card, just without the actual card.
The buyer purchases it online and loads it with money. Alternatively, they may buy a card with amounts set by the retailer. The buyer can then send it to the recipient via email. The value of the card is usually in the original code attached to the card.
Recipients can typically spend the card online, using the provided code and possibly a PIN, or in a physical shop.
Virtual gift cards come with potential benefits, such as convenience and ease of use. They may also help an individual stay on budget and avoid overspending. Here’s what to know:
With virtual gift cards, it doesn’t matter where the buyer or the intended recipient are located. For instance, if someone wants to buy their friend or family member a gift card for a shop they loves in their area, they may be able to buy it online and send it to them via email, even if the retailer is not near them.
Sending gift cards through email or text can be simple and quick. This way, individuals typically won’t have to wait a certain number of business days for their friends or family to receive the gift. They also don’t have to worry about the virtual gift card getting lost or stolen on its way to the recipient.
Virtual gift cards can usually be redeemed at any time or place that the receiver wants, once they are online. And if there's a remaining balance on it, keep the details — such as the code and PIN — on hand and reference it for future purchases.
Having a set amount allocated on a virtual gift card may also help with budgeting. What to know and tips for getting started article. A virtual gift card could be used to avoid overspending and help users stay on track with their financial goals.
Gift cards can expire, so look out for the final date by which the money loaded on it can be spent. Sometimes recipients may be able to extend the term for a fee.
If the retailer that issues the card goes out of business, there could be a problem with getting the card honoured. The same risks may also apply to physical gift cards.
Check out PayPal’s digital gift ideas here.
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