Tuesday, May 07, 2019

The Different Types of Gift Card and How They’re Regulated

Many of you FundScrip fundraising supporters and administrators would consider yourselves to be gift card enthusiasts who use gift cards for almost every purchase, but do you really know everything about them? FundScrip is your guide to the gift card world, and we'll make sure you're kept informed, safe, and with no surprises. So if you consider yourself a gift card expert, read on to learn about the different types of gift cards and the intricacies of how they are regulated.

Typically, there are 2 types of gift cards: Closed-loop and Open-loop.

Closed-Loop (Retail Gift Card)

The Closed-Loop Gift Card is also known as a retail gift card. These cards only work at one store, or with one corporation’s brand. This type of gift cards is governed by provincial gift card specific laws . According to these laws, close-loop gift cards are in general not allowed to have an expiration date or activation fees. However, in some provinces or territories merchants may charge a fee for customer service issues such as recovering the funds on a lost card.

Open-Loop (General Use Prepaid Card)

These cards look like a credit card, are not specific to a business, and are accepted nearly everywhere. They process on credit card systems such as Visa and MasterCard and are issued by financial institutions (such as a bank). Open-loop gift cards are governed by federal law , specifically the Prepaid Payment Products Regulations which is part of the Canada Bank Act. Generally, these cards are allowed to have activation fees, expiration dates, and/or draw down fees after a certain number of months (usually 16 months). Often, prepaid payment products such as open-loop gift cards have additional protection, such as zero liability protection against fraud, theft, and other financial crimes.

How Do I Tell Which Type of Card I Have?

Look on the back of the card. If there is a name of an issuing institution such as bank, trust or loan company, then it’s likely you have an Open Loop prepaid card.

Which Kinds of Gift Cards Does FundScrip Carry?

The vast majority of gift cards that FundScrip offers are Closed Loop (retail) gift cards, and therefore have no expiration date or fees. However, on the rare occasion that we will offer a card that may have draw down fees after 16 months or an expiration date, don't worry - we will notify you with a warning before you purchase the card. Additionally, you can always review the Disclaimer or Usage Restrictions for any gift card we have by browsing our list of retailers and clicking on any retailer logo. And finally, since we sell the same cards the retailers sell, it’s always a good idea to look on the back of the card and consult the website of the retailer directly to find out the full details of the card.

Now that you’re armed with this information, you’ll be able to take advantage of your gift card fundraising campaign in full confidence. Happy fundraising!