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The Evolution of Gift Cards

Gift cards are an alternative to using money or credit cards. A customer pays a certain amount to a retailer or bank to get a gift card. Often these cards are given out as presents during the holidays, for birthdays and on other occasions. The recipient can use the cash value of the gift card to buy what they want. Consider the evolution of gift cards and what they mean to shoppers today.

The First Gift Card

For generations, people purchased gift certificates from retailers. They were hand-written or printed pieces of paper that represented a designated cash value. These gift certificates were large and could be easily destroyed by folding them, getting them wet or other circumstances. One of the first gift cards was introduced in 1994 by Blockbuster Entertainment. Color copiers and printers were making it simple for people to counterfeit gift certificates. Gift cards were created to avoid this fraudulent redemption of gift certificates.

Other Gift Cards Soon Followed

The first gift card transactions for Blockbuster were processed by a company called Nabanco in Florida. Using gift cards reduced the excessive redemption of gift certificates at Blockbuster. Soon other major businesses started to issue gift cards rather than paper gift certificates that could be duplicated. The next gift card was issued by the department store Neiman Marcus. Clearly gift cards were going to be the trend of the future.

Gift Cards Issued with Phone Cards

Once gift cards became mainstreamed, they were issued with phone cards. After Neiman Marcus, Mobil Gas offered a card which also offered prepaid phone value from MCI. Following shortly thereafter was the Kmart Cash Card with prepaid phone time from AT&T. At that time phone time was coveted. As communications technologies continued to evolve, Mobile and Kmart dropped the phone card feature. While people still use phone cards, most people choose package deals on landline phone services and a contract for mobile devices.

Gift Cards for Returns

There are many reasons to return merchandise. Sometimes we get a gift we can't use but don't have a receipt. Other times we just decide to take something back. Retailers may opt to give you a gift card with credit to spend at the store. The first replacement for cash returns was the Kmart Mags Pangilinan Cash Card. Merchants. Today retailers often issue a gift card for returns made without a receipt.

Modern Gift Cards

Modern gifts cards may bear a logo or image that helps to brand a certain business. They can be used by anyone who holds the gift card. A code or number is used to identify each gift card issued by a business. Gift cards look much like a credit card. They are the same size and shape so people can keep them in a wallet or handbag with slots. Certain gift cards can be reloaded, such as the Starbucks gift card. This means people add money to the card so they can just swipe it when they make a purchase. No money has to be exchanged for each transaction. The gift card has a magnetic strip or barcode that can be read by an electronic credit card machine.

Basic Types of Gift Cards

Today there are two basic types of gift cards. Open loop gift cards are issued by credit card companies or banks, such as American Express or Visa. These gift cards can be redeemed at any establishment that accepts these types of cards. The recipient has the ability to choose from an array of retailers. Closed loop gift cards can only be redeemed at a certain restaurant or store. The recipient may select any type of merchandise from the designated store but cannot use the gift card at another establishment. Gift cards are also issued to encourage people to make charitable donations. Some gift cards expire and the recipient should verify how long they have use the card. Sometimes people forget they have a gift card and it never gets cashed in.

From Gift Certificates to e-Gift Cards

While some places still issue gift certificates signed by an authorized business manager, most places depend on plastic gift cards. A large number of retailers also offer e-gift cards. These gift cards can be printed and have a specific code to identify each one issued. Some retailers are now offering mobile gift cards people can instantly access from a smart phone or other mobile device. The gift card is displayed on the screen of the mobile device to be cashed in at a certain retailer. Alternatively, a code is entered when people shop online. Typically codes are entered during the checkout process when you shop online.

The Popularity of Gift Cards

Gift cards are perfect to give to people who are particular. You might not know what to buy for a picky aunt or the uncle who has everything. A gift card gives them countless options. In 2006, they were the most coveted gift by women. They were the third most coveted gift by men. Last year, nearly 50 percent of United States consumers bought gift cards as holiday presents. A gift card can be slipped into a greeting card and mailed without additional postage costs. Gift cards also fit into a holiday stocking. There are even special stuffed animals and gift boxes made to hold gift cards so they look even more appealing and festive for any occasion.


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PO Box 202 • Irvington on Hudson, NY 10533 • Tel: 845-507-0220