Gift Card Business Model: How to Make It Work

Gift Card Business Model: How to Make It Work

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Do you have a gift card program? If not, you may be missing out on some big profits. Gift cards are becoming increasingly popular, and for a good reason. This blog post will discuss the secrets behind a gift card business model. We will also look at the benefits of gift card programs for businesses and customers alike.

Key Points

  • How Do Companies Make Money From Gift Cards
  • Types of Gift Cards
  • Different Types of Gift Card Business Models
  • Our Takeaway

How Do Companies Make Money From Gift Cards


There are a few different ways that companies make money from gift cards. The most obvious way is through the sale of the cards themselves.

However, here are some other effective ways gift cards bring money into a business:

Overspent Balances

Studies have shown that customers who receive gift cards are more likely to try out a new business than those who do not. Customers who have gift cards tend to spend more than the card’s value.

This is because they feel like they have to use the entire balance before it expires.

Unspent Balances

Businesses also make money from unspent gift card balances when people forget to use them before they expire. This means that the company gets to keep the money.

Gift cards typically have an expiration date of one year, so companies know that they will get the money eventually.

Fees

Another way companies make money from gift cards is by charging fees. Some companies will charge a monthly or annual fee for using their gift card program. Others will charge transaction fees every time the card is used.

Gift cards are sometimes purchased as credit cards, meaning businesses can earn interest on the funds until they are used. This can be a significant source of revenue for companies that offer high-value gift cards.

Customer Data

Gift card business opportunities don’t end there—some companies can make money from gift cards through the sale of data. Gift card transactions contain a wealth of customer data that can be used for marketing purposes.

This data can be sold to other businesses or used to target ads and special offers to customers.

Types of Gift Cards


Gift cards are a fantastic way to show your loved ones that you care, and they can be used for a variety of different occasions. Birthdays, Christmas, anniversaries, weddings, graduations, and more! Gift cards can make the perfect present for anyone and everyone.

Many different gift cards are available on the market, so it is essential to know which one is right for the occasion. Here is a list of the most common types of gift cards:

Virtual Gift Cards

Virtual Gift Cards are redeemed online. They usually have a code that can be entered at checkout on the retailer’s website. Often, they can be printed out and used in-store as well. Virtual Gift Cards are an excellent option for those who want to give a Gift Card but don’t want to deal with the hassle of shipping.

Barcode Gift Cards

Barcode Gift Cards are those that have a barcode that can be scanned at the register. They are often used for retail stores, restaurants, and other businesses. Barcode Gift Cards are a convenient option for those who want to give a gift card but don’t want to carry around a physical gift card.

Plastic Gift Cards

Plastic Gift Cards are the most common type of gift card. They are made of PVC and have a raised number on the front for identification. While not the most popular at first, a recent survey showed businesses that switch from paper gift certificates to plastic gift cards increase gift card sales anywhere from 35% to 50%, and in some cases, it’s up to 100%.

Plastic Gift Cards can be used at various businesses, including retail stores, restaurants, etc. They are an excellent option for those who want to give a gift card but don’t want to deal with the hassle of shipping.

Custom Gift Cards

Custom Gift Cards are a great way to add a personal touch to a gift card. They can be made with various designs, colors, and messages.

How Do Gift Card Programs Work

Gift card programs are a great way to increase sales and encourage customer loyalty. But how do they work?

Gift cards are purchased by customers and then given to friends or family members, even employees and coworkers. The recipient can then use the card to buy items at the store where it was purchased or any other store that accepts the card.

There are a few different types of gift card programs. 

The most common type is the retail gift card. Retailers offer these cards for sale in their stores, and they can be used at any store that accepts the card.

Another type of gift card is the corporate gift card. Corporate gift cards are given to employees or customers to show appreciation. Like retail gift cards, the corporate ones can be used at any store that accepts the card.

Different Types of Gift Card Business Models


Gift cards have become an essential part of many businesses marketing strategies. Gift cards allow customers to purchase items from a company without carrying around cash or using a credit card. Gift cards also give businesses a way to track their sales and customers’ spending habits.

These are the most popular gift card programs for small businesses and beyond.

Prepaid Debit Gift Card

The most popular type of gift card is the prepaid debit card. This type of gift card can be used anywhere that accepts debit cards. Prepaid debit cards are reloadable, so customers can add money to their cards when they need to.

Closed-Loop Gift Card

Another type of gift card model is the closed-loop gift card. This gift card can only be used at the business that issues the card. Closed-loop gift cards are not reloadable, so customers will need to buy a new card if they continue using the service.

Businesses can also offer gift cards that can be used for a specific purpose. Some companies offer gift cards that can only be used for online purchases. Others offer gift cards that can be used for online and in-store purchases. Gift cards that can be used for online and in-store purchases are also available.

Businesses should choose the type of gift card that best meets their needs. Gift cards can be a great way to attract new customers and increase sales.

Gift Card Business Model: Our Takeaway


Utilizing the gift card business model is an effective way to increase sales and attract new customers. If you’re not currently using gift cards as part of your marketing strategy, it’s time to consider this option.

They are a convenient way for customers to purchase your products or services, but they can also help build loyalty among your customer base. Have you tried using gift cards as part of your marketing?

Frequently Asked Questions

Are gift cards profitable for business?


Gift cards can be a great way to increase sales and profits for your business. In addition to attracting new customers, gift cards can also help build loyalty among your existing customer base.

There are two ways companies can earn on gifts cards:

  • Unspent Balance: Gift cards usually have a value that’s higher than the amount of money spent on them. The difference between the two is called the “unspent balance,” and it goes to the company that issued the card.
  • Breakage: Gift cards also have an expiration date, and many people never use them before they expire.

Can you use Walmart gift cards online?


Yes, you can use Walmart gift cards online. Its gift card business model is set up so cards can be used for all sorts of purchases, including groceries, clothes, and electronics. However, some restrictions may apply. For example, you may not be able to use a gift card to purchase items from third-party sellers on the Walmart website.