How Do Stores Make Money Selling Gift Cards?

Gift cards are becoming an increasingly popular gift during the holiday season, but how do stores make money when they sell these gift cards? Gift cards are essentially IOUs that can be used to purchase goods and services at specific locations or stores. 

When a store sells its gift cards, it does so with two distinct intentions: make sales and generate revenue by selling its product, or produce profits by selling the gift card at a discount. Let’s take a look at these two scenarios to see how stores make money selling gift cards. If you have a spare cards and want to sell gift cards for cash, look no further than GC Buying.

Stores need to sell enough to break even

Gift card purchases are paid for in full at time of purchase. A $50 gift card actually costs a store $50, so they need to sell it at face value or higher in order to break even. This is why you often see gift with purchase sales, especially around holidays and special occasions like Mother’s Day. 

Stores will discount an item that’s not moving well and encourage customers to buy a gift card at regular price as part of their promotion. In some cases, customers may receive more than one gift card per transaction (i.e., two $25 cards instead of one $50 card). 

Retailers also offer discounts on certain products when purchasing a gift card. These deals aren’t necessarily advertised—you have to ask about them when you check out at many retailers. 

Sometimes you can get an additional 5% off your purchase if you pay with cash; other times, using your credit card will net you 10% off your total bill (including your merchandise and any extra gifts or incentives). Again, these deals aren’t always advertised and are subject to change without notice.

Fees charged by payment processors

Gift card sales are often subject to a credit card processing fee. This is usually a flat fee per transaction. For example, if your store sells $1,000 worth of gift cards in December, you may have to pay your credit card processor a total of $30 in fees—no matter how many cards you sell. 

Check out our thorough post on credit card processing fees for more information. Fees can be reduced or eliminated by working with an experienced payment processor who offers volume discounts and other incentives for high-volume businesses. 

You might also consider using Square to process payments; they don’t charge any additional fees beyond their standard 2.75% rate (although there are still costs associated with obtaining a Square account). Gift card sales are often subject to a credit card processing fee

Do you want to sell gift cards for cash? Come to GC Buying!

If you are looking to sell gift cards for cash, then look no further than GC Buying. We have a history of buying unwanted or expired gift cards. By purchasing these at face value, we give people like you a chance to get rid of some extra or worthless cards while we make some cash.

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