Document Type

Article

Publication Date

10-2016

Abstract

This paper reviews gift cards and the regulations associated with these instruments in financial transactions. One important consideration of gift cards involves secondary markets and money services business. While the accounting of gift cards by retailers is easy when they are redeemed, gift cards become problematic when breakage (non-redemption) occurs. In addition to large organized exchanges for gift cards, many prospective sellers and buyers have turned to non-mainstream dealers to handle situations relating to the non-redemption of the gift card. This has caused gift cards to become an increasingly important player in the secondary market. Another important observation with these instruments involves the true cost to buyers. Most consumers fail to consider opportunity costs and alternatives. Since gift cards are perceived differently than cash, opportunity cost consideration should be viewed differently to determine the effective price value.

Comments

The copy of record is available from the publisher at https://dx.doi.org/10.18374/JIFS-16-2.4.

Copyright © 2016 International Academy of Business and Economics. Reprinted with permission. All rights reserved.

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