Electronic Gift Card System Overview
How a Gift Card System Works
Sales
A customer purchases a Gift Card with cash, check or credit card for any dollar amount desired. The amount purchased is recorded as "stored value" at the gift card processors secure data center.
Redemptions
The Cardholder presents the gift card for full or partial payment of a purchase. The merchant swipes the card through the gift card POS terminal for authorization and transmission of data to the gift card company's data center. The card's magnetic stripe identifies the card number, merchant location and terminal ID for which the card has been issued.
Reload Incentives
The cardholder can purchase additional value or "reload" the card for any dollar amount during their visit to the merchant's location. Many gift card companies provide its merchants with various promotional programs to encourage card reloading.
Data Processing
Electronic gift card systems operate in real time as a closed loop debit network. Transactions, such as card activations, reloads, redemptions, and balance inquiries initiated from the gift cardr company's POS terminal, are transmitted to its secure data center. The transaction request is authorized, data is captured in the merchant database and an approval or requested information is transmitted.
Security Features
Gift card transactions and balance inquiries are processed in real time over secure electronic transaction system networks. Gift cards remain inactive until activated on-site which reduces employee theft and counterfeiting.
