4 ms·
Conversely, here's really "All you need to know about gift cards": think about the interest being generated from all that cash sitting idle on some issuer's acc
by airstrike 5y ago
Conversely, here's really "All you need to know about gift cards": think about the interest being generated from all that cash sitting idle on some issuer's account while the recipient of your gift card decides how to spend their money.
> Most retailers do not have sufficient gift card liabilities and do not have sufficiently sophisticated treasury teams to make a meaningful amount of income off an investment portfolio.
This assumes that the retailer is the one holding the cash and not the issuer of the card. I'm by no means an expert in the industry but IIRC there's a whole lot more that goes into this than the author implies.
> Also, they have a much better option. Unlike insurers, who must maintain reserves by regulation, most businesses issuing closed loop gift cards are not required to maintain reserves. They can simply use the cash as a source of working capital for the business, similar to other sources of working capital, except substantially free. Even in a capital-drenched economy, it is tough to beat free.
Agreed, except it would be much better for it to be either me or my recipient who benefits from said "free money".
- mistrial9 5y agoyes, the article mentions coupons briefly, which are ancestors and a very large topic. Diligent literature search turned up very little. The way the money is actually handled is trade secret it seems. This is a very old aspect of money handling in retail.
- brewdad 5y agoMy brother gifts us AmEx gift cards every year. I think he gets them at a discount so it does allow his gifting budget to go further but they are a pain in a-- to use. Unlike a store gift card, they are almost impossible to stack with other payment methods (at least online). Additionally, the test charges a store does to ensure the card is valid places a hold on some of the funds of the card (typically a dollar) making it virtually impossible to use all of the funds on the card. Typically, I end up adding them to my Amazon payment methods and buying an Amazon gift balance to myself and toss the remaining $1 of value in the trash. I also end up "buying" the gift cards from my wife and son since I'm the only one with the patience to deal with them, so at least we get most of the value off of them rather than letting them expire. It's now 12 days until Xmas and I finally spent us down to only $11 left from last year's cards.
- Symbiote 5y agoWouldn't it be easiest to use the money for routine spending, perhaps somewhere where splitting a bill is normal? For example, next time you take the family to a restaurant. "Could you put $50 on this card please, and the rest on this one."
- BizarroLand 5y agoAlso, just go to the gas station and prepay with the amount that the card has on it to the penny.
- jldugger 5y ago> it would be much better for it to be either me or my recipient who benefits Better for whom?