Exchanging gifts during festive season or giving gifts on important occasions (such as marriage or childbirth) is an important part of Indian society. Yet, many people have a tough time in choosing the right gifts for their loved ones. To make this task (of choosing gifts) easier, many banks and retail outlets have come up with a smart gifting solution called ‘Gift Cards'.
What is a gift card?
A gift card is a plastic card that works much like any other prepaid cards in the country. The gift card has a magnetic strip on it and it looks very similar to a credit card or a debit card. But, it is neither a credit card nor a debit card. It is different from a credit card because its user does not accumulate debt on using it and it is also different from a debit card because the money spent on its use is not linked to any bank account.
Pre-paid gift cards can be purchased from banks by paying cash equal to the full value of the card, in addition to extra charges such as joining fees, which may be levied by some gift card issuers. Generally, these cards are available for values starting from Rs. 500 till Rs. 50, 000. When the entire value of the card including the additional charges, are received by the bank, the card is activated with the loaded amount. Then, the card is ready to be gifted to anyone, who will be able to use it in numerous stores which accept the card type (Visa, MasterCard or American Express).
Whenever the recipient of the gift card uses it, the value of the purchase is deducted from the balance in the card. It means that a gift card can be used multiple times for partial values till the total amount gets used up or till its validity period expires. Normally, gift cards are valid for a period of up to one year.
Types of gift cards
There are two types of gift cards available to a customer:
1. Open Loop Card: Gift cards which are offered only by banks in collaboration with credit card platforms such as Visa or MasterCard are called open loop cards. These cards can be used to make purchases throughout the country in all retail outlets which accept gift cards.
2. Close Loop Card: These are the gift cards which are issued by individual brands and can be used to make purchases in their retail stores or chains only. There are many merchants in India which sell gift cards like Big Bazaar Gift cards, Fastrack Gift Cards, Titan Gift cards etc.