What is a Gift Card & its various Types?

If you are one of the many individuals who have a tough time deciding on a gift for your friend at her wedding or your teenage nephew’s birthday, then Gift Cards can be a good choice.

A Gift Card looks and works like a Debit Card, but it is preloaded with a certain amount of money by the one who gifts it. The receiver of the Gift Card can then spend the prepaid amount on several electronic payment purchases made online or in retail shops. Sometimes, you can use a Gift Card to make a part payment on a purchase, too. You can read more on how to use a Gift Card here.

However, you cannot withdraw the cash loaded in the card; it can be used only for payments made through the card. Also, Gift Cards issued by banks have an expiry date that may range from 3-12 months.

Open Loop (or Network) Gift Cards

Open Loop Gift Cards are versatile and widely accepted as they are associated with major payment networks like Visa, MasterCard, or American Express. You can use this card at any retailer or merchant that accepts cards from the corresponding network. They are usually ideal for shopping, dining, and even online transactions.

Closed Loop Gift Cards

Closed Loop Gift Cards offer limited use because they are accepted only at specific locations or for a select group of brands. Particular retailers, restaurants, or service providers often issue these cards, intending them for use within their own network of stores or outlets. For instance, you can only use a gift card from a popular coffee shop chain at that chain’s locations.

Reloadable Gift Cards

Reloadable Gift Cards are meant for repeated use, letting you add funds to the card multiple times until the expiration date. They are often used as a budgeting tool or for recurring expenses, such as monthly grocery shopping or fuel. Reloadable Gift Cards are also popular among parents who wish to provide their children with a controlled spending allowance.

Non-Reloadable Gift Cards

Non-Reloadable Gift Cards can only be loaded with funds once. After you spend the initial balance, you cannot reload the card, and it becomes unusable. These cards are commonly given as gifts for special occasions and are often used for one-time purchases or experiences. Some non-reloadable cards may offer the option to become reloadable after completing a specific registration process with the issuing bank.

Bank/Credit Card Company Issued Gift Cards

These cards are mostly open-loop and can be used to pay various merchants. They often come with electronic authorisation to ensure the security and tracking of funds. These cards might come with administrative fees, and the option to reload them can vary.

Bank-issued Gift Cards are reliable for those who prefer having multiple spending choices.

Retailer/Brand/Individual Business Issued Gift Cards

These Gift Cards are usually closed-loop and are issued by specific retailers, brands, or individual businesses to promote customer loyalty and drive repeat business. They are often used as promotional tools or rewards and are accepted only at the issuer's locations or affiliated stores. These cards are ideal for giving a personalised gift that aligns with the recipient's interests, such as a card for their favourite clothing store or restaurant.

Gifting cash in India can be inappropriate sometimes as the amount gifted is judged. There are a couple of more reasons why one should choose a Gift Card over cash:

• Safety: You can register Gift Cards online, allowing you to freeze the card if it is lost, thereby protecting the remaining balance.
• Convenience: Gift Cards are a convenient way to let young shoppers enjoy within set limits. You can also send mobile Gift Cards through SMS or email, which can be conveniently carried in a mobile phone. Since the Gift Card will be associated with a particular phone number (that of the receiver), it is more secure.
  

Gift Cards are also available in an electronic form – e-gift cards. The recipient of an e-Gift Card receives it along with the card number and a PIN in his/her email. The one who has purchased it also receives the PIN as a confirmation of the email sent to the recipient. You can use an e-Gift Card like a physical Gift Card to shop online or in stores.

Gift Cards may be easier than a well-thought gift, but before you choose one, consider the person’s likes and interests you intend to give it to. Since different Gift Cards are tied to specific brands, it is important to choose the right one to ensure your gift is appreciated.

Looking to apply for an e-GiftPlus Card? Click here now!

* Terms & conditions apply. GiftPlus Card approvals are at the sole discretion of HDFC Bank Ltd