how do shops make money reselling gift cards?

Question

Surely someone is going to loose money or not make any money as the company with gift cards ( like microsoft )would loose money selling it discounted to the shop (like Tesco), and there would be no point the shop selling it for no profit. How does this work ?

In: Economics

Answer 1

The selling store gets a commission that’s a percent of face value… say 10%. The issuing store views that cost as a marketing expense to acquire a customer, just as they’d view a TV ad, Sunday paper insert, promo codes, etc. costs.