Many retailers offer special gift card promotions that can increase the value of your gift cards. These can include bonus gift cards on select purchases or cash back offers.
Gift cards are money in the bank for most retailers. But you should 상품권현금교환 watch out for fees that can quickly eat into their value, like purchase or shipping fees.
Value of the Gift Card
A gift card is an exchange of cash for a voucher that can be used to purchase goods or services. As a result, it should not be subject to sales tax. However, if the gift card is used to purchase taxable items, then sales tax applies.
Whether or not you charge sales tax on a gift card sale depends on your state’s laws and regulations. The National Conference of State Legislators has a handy table of gift card and certificate laws by state.
If you do decide to charge sales tax on gift cards, make sure you clearly communicate this to your customers. Also, make sure your point-of-sale system doesn’t automatically apply sales tax to gift card purchases or other workarounds that may be in violation of state law. Finally, consider retaining the services of a tax or legal professional to help you comply with the law. This will reduce your risk of over- or under-collecting taxes and protect you from class action lawsuits.
Retailer’s Fees
Unlike gift cards issued by banks, some retail gift cards may come with fees, such as an activation fee. This is typically a one-time charge and is often included in the card’s initial purchase price. Other retail-issued gift card fees include slotting fees, shelf fees, festival fees and chef fees.
Repeat customers are a huge component of business for many retailers, so they are willing to pay extra in order to retain them. However, this is not necessarily a good thing for consumers as the additional charges can sometimes be quite high and can significantly reduce the value of the card.
According to NRF, debit and credit swipe fees are most merchants’ highest operating costs, driving up prices by about $1,000 a year for the average family. As such, NRF has fought to keep these fees as low as possible for more than 20 years.
Shipping Fees
The cost of buying and shipping a gift card cuts into the amount that your recipient actually gets to spend. That’s why it’s important to find out the total cost of a card before making your purchase.
For example, some prepaid cards, particularly those from banks and credit card companies, come with purchase fees, which are added to the total value of the card. They may also charge reload fees or other charges when the card is used again. Additionally, some states have escheatment laws that could cause institutions to charge a fee when the card hasn’t been used in a certain period of time.
Other types of charges may include a replacement fee (if a gift card is lost or stolen), service fees, dormancy or inactivity fees and reloading fees. These charges must be clearly disclosed in the terms and conditions of a card. This ensures that you’re not surprised by any hidden costs.
Redeeming a Gift Card
Gift cards make great gifts for anyone, from foodies to gamers to sports fans to pet lovers. However, before you head out to purchase a gift card, do some research. You may be surprised to learn that the value of your gift card could be impacted by extra charges.
The cost associated with opening and shipping gift cards eats away at the intrinsic value of the card, while a retailer’s markup on merchandise also takes money from the customer. Fortunately, there are ways to minimize these costs.
If you want to avoid gift card fees, consider purchasing a gift card that can be used online at a retailer of your choice. There are a variety of options available, including those from Amazon. These cards can be redeemed by entering the 16-digit claim code and clicking “Apply to Account.” Other ways to reduce the cost of buying a gift card include purchasing items for charity instead of using them for personal purchases.