Robert McKinley, chief executive officer of CardWeb.com stated, "Retailers like them because it gives them a pipeline into the teen market and the estimated 20 to 23 million 'un-banked' consumers who don't hold accounts at financial institutions but want the buying ease of plastic".
It's more than just plastic vs. paper. While both products are sold in pre-set denominations, you'll get cash back if your gift certificate is worth more than your purchase.
Profitability - gift cards out perform paper certificates, eliminating the need to refund cash back. Pre-paid Sale - generates immediate cash flow.
Multiple Uses - merchandise return cards, employee incentives, marketing tactics, etc.
Better Reporting - extremely difficult and time consuming to track paper certificates.
Accurate, Online Tracking - track activity by store, venue, issuer, account or by individual card.
Eliminates Fraud - extremely difficult to duplicate.
Pick up a pair of $45 pants with your $50 jean store gift certificate and you can go down the street and buy lunch at the doughnut shop with your change. Not so with a gift card. Buy something for $45 with the $50 gift card and you have $5 left to spend at the same store next time you're there.