Closed Or Open Loop Gift Cards: What Is The Difference?
There are two kinds of Gift Cards; all you have to do is decide which option suits you better. Closed Loop Gift Cards are cards that can be used only in your business and are unusable anywhere else. Open Loop Gift Cards can be used in other places instead of only for buying your merchandise.
Pros Of The Closed Loop Gift Card
The pros of the Closed Loop Gift Card are that it brings the customer to your business, so you reap the benefits. At the same time, activation is free for the customer. Keep in mind that a small percentage of customers actually never use this Gift Card. If a customer buys a $50 Gift Card and doesn’t use it or uses just a part of it, you make a profit without actually providing anything in return.
Another benefit of the Closed Loop card is that it provides discounts on various products. That means that you will see an increase in sales and profit generated by repeat customers. A card designed to be used exclusively at your business, ensures you have an opportunity to capture more sales.
Pros Of The Open Loop Gift Card
The Open Loop Gift Card has many of the same characteristics as the Closed Loop card. It also has unique features that the other options do not provide. These include the ability to be used at any business or establishment that processes credit cards. Its flexibility of use is similar to that of cash and credit cards. An example of this would be VISA or MasterCard-type gift cards. These are Open Loop cards that can be used at any establishment where accepted.
A downfall of Open Loop cards is that not every small business can take advantage of these cards. This is because they must be accepted by many retailers, restaurants, and establishments in order to provide actual benefits. Also, there is usually an activation fee associated with Open Loop Gift Cards.
Ultimately, both of these cards can be beneficial for your business if used correctly. All you need to do is think about what you want to achieve by using them and you’ll be on your way to grow your business.
