THE PROS AND CONS OF GIFT CARDS

Gift cards are slowly gaining popularity in Africa, especially Nigeria. Although they have been in existence as far back as 1994, they are just slowly creeping their way into the mainstream in Nigeria. Now let’s make sure you don’t think of gift cards as Christmas and birthday cards. 

Gift cards are prepaid stored-value money cards, usually issued by a retailer or bank, to be used as an alternative to cash for purchases within a particular store or related businesses. Lots of retailers offer consumers gift cards as a way to shop or give money to friends to shop both online and in physical stores. There are two types of gift cards — physical and digital/virtual (e-gift cards) and each comes with a wide range of features and benefits. Now that you know we’re not talking about Christmas and Birthday cards, let’s get to how gift cards work.

How do Gift Cards work?

You already know gift cards are a form of payment, but how exactly do they work, you might ask? Well, let’s get to it. You simply load money onto the card, which you or the gift card’s recipient can then spend at accepted locations. 

Gift cards can be open-loop or closed-loop. An open-loop gift card can be used anywhere that brand of card is accepted. For example, if you have a gift card that’s branded with the Visa logo or Mastercard logo, you could use it to make purchases anywhere Visa or Mastercard is accepted. 

A closed-loop card, on the other hand, can only be used at specific merchants. For instance, a gift card purchased from Shoprite or Amazon would only be valid for use at their stores. Knowing what they are and how they work, we can now get to the pros and cons, as there’s always an upside as well as a downside to most things.

Pros of Gift cards

• Convenience: Gift cards are perfect for giving gifts to people that are hard to shop for. Some people cannot just receive the perfect gift. It could be a problem with size, colour, preference and the likes, but with gift cards, they can go get whatever they want by themselves and they can thank you for that.

• Little or No shipping costs: Sending a gift to a loved one can be expensive when you’re far apart. Digital cards can be sent online easily and so, you don’t incur any shipping cost. Physical cards would attract shipping costs but would be very minimal considering the weight of the card is close to nothing.

• Save money: Gift cards, if you know good places to buy them, can come at discounted rates and so would help you save up on more than money that would’ve been used to buy a particular item with actual cash.

• Transferring money: Virtual gift cards have become popular for being an easy means of transferring money, especially internationally, as it is easy to convert and doesn’t attract transfer fees.

• Controlled spending: Gift cards help to control spending as they can be used as an alternate source of payment, instead of paying cash or with credit or debit cards. Also, they don’t attract bank charges, so that’s a huge plus.

• They can be exchanged for money: This wasn’t always the norm but now, lots of platforms have emerged for converting gift cards to cash with good rates and so it’s just a very good way of giving gifts. You don’t lose with it.

These are certainly nice pros to have, but there are also cons. We shouldn’t just talk about how amazing something is, we also need to look at the downsides of using them. So, with that being said, let’s get to the cons of using gift cards.

Cons of Gift cards

• Gift cards can feel impersonal: They can look like gifts that weren’t given with a lot of thought. Let’s face it, the ease of getting a gift card and giving it to another person can also come off as lazy. To some recipients, they might not give it much thought, but might be the other way for others. It’s just a ‘know your audience’ kind of thing.  

• Gift cards aren’t guaranteed: If a company where a gift card was bought files for bankruptcy, the holder probably misses out. Also, if the gift card goes missing, the money goes as well.

• Fees and expiration dates: Some gift cards come with expiration dates and others can come with fees if they aren’t used in a certain amount of time. This might not be convenient for people that don’t plan on using the gift card immediately they are given.

• Some Gift cards can only be used in specific stores: The store where a gift card can be used might not be close to the recipient and so might not be convenient for some people.

Gift cards have their advantages and disadvantages, but one thing certain, they should be known by everyone so they can decide for themselves if they want to jump in on this trend of using gift cards or not.

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Gift cards are slowly gaining popularity in Africa, especially Nigeria. Although they have been in existence as far back as 1994, they are just slowly creeping their way into the mainstream in Nigeria.