Demystifying Gift Card Industry Jargon: 10 Key Terms You Need to Know

Gift cards have become a staple in modern consumer culture, offering convenience and flexibility for both buyers and recipients. However, navigating the world of gift cards involves understanding a variety of terms that can sometimes be confusing. At RLC Solutions, our mission is to help brands maximize their gift card potential. In this blog post, we’ll break down essential gift card terminology to help you make informed decisions in the industry.

1. Gift Card

A gift card is a prepaid payment card that holds a specific monetary value. It serves as an alternative form of payment, allowing recipients to choose their desired products or services from a particular retailer or business. Gift cards come in both physical and digital formats.

2. Closed Loop Card

A closed-loop card is a type of gift card that is limited to a specific retailer or group of affiliated retailers. These cards can only be used for purchases within the designated brand, offering a focused and controlled spending experience.

3. Open Loop Card

An open-loop card is a gift card that carries the logo of a major payment network, such as Visa, MasterCard, or American Express. These cards can be used at various merchants, providing recipients with greater flexibility in their spending choices.

4. Processor

A processor refers to a company that handles the technical aspects of gift card transactions. Processors manage card activations, redemptions, balance inquiries, and other backend operations to ensure a seamless experience for both brands and customers.

5. Multi-Branded Gift Card

A multi-branded gift card is a unique offering that allows recipients to use the card at different brands or businesses owned by the same company. This encourages customers to explore various offerings within the brand ecosystem.

6. Issuer

The issuer of a gift card is the entity responsible for creating and distributing the cards. It could be a retailer, business, or even a financial institution. Issuers determine the terms and conditions of the gift card, including any associated fees and expiration dates.

7. Recipient

The recipient is the lucky individual who receives the gift card. They can use the card to make purchases up to the card’s value, enjoying the freedom to choose products or services that match their preferences.

8. Breakage

Breakage refers to the portion of a gift card’s value that goes unredeemed. This can occur when recipients forget about their gift cards or when small balances remain after partial redemptions.

9. Upspend

Upspend is the phenomenon where gift card recipients spend more than the initial value of the card when making a purchase. This additional spending can lead to increased revenue for the issuing brand.

10. Redemption

Redemption is the process of using a gift card’s value to make a purchase. When a recipient selects products or services and uses the gift card as payment, it’s considered a redemption.

Are you a brand looking to harness the power of gift cards? At RLC Solutions, we specialize in unlocking the full potential of gift cards for businesses like yours. Whether you’re interested in closed-loop or open-loop strategies, enhancing redemption rates, or minimizing breakage, our team is here to guide you. Reach out to us today to learn how you can leverage the gift card industry to its fullest!

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