What are giftcards? Where is the money? How do they get the money? Where is the profit margin?

Question

What are giftcards? Where is the money? How do they get the money? Where is the profit margin?

In: Economics

Answer 1

The giftcard contains an account number which stores the money that you spent when you bought it. When you use the giftcard, it spends down the money in that account.

The profit margin comes from 2 places. One is that the place you get the giftcard from would rather have money now than later. The second is that many people never fully spend their gift cards.