Comment by andy99
3 days ago
What is the core argument why a gift card would ever be used instead of cash?
I can see if someone didn’t have any money and had a card and wanted to try and sell or exchange it, otherwise? Cash might have some limitations but none that are worse than a gift card.
Cash requires in-person exchange. To use it electronically, you’d need to participate in the formal banking sector. Many people can’t or don’t.
Instead you can take your cash to any of a large number of retailers and acquire a card that sits outside the tight credit/debit-card regulations. That card, thanks to the wide reach of various multinational corporations, has broad (and cross-border) value and is suitable for electronic exchange. All that in exchange for a small(ish) tax (the price of the card plus whatever discount the recipient/exchange applies to its face value), and less recourse if you’re scammed or you screw up somehow.
Incidentally you might be interested in @patio’s description [0] of Japanese konbini (convenience store) payments. There, your remote payee gives you a transaction number. You take that number to your local convenience store and hand them the cash to complete the otherwise-electronic transaction.
[0] https://www.bitsaboutmoney.com/archive/payments-in-japan/#:~...
In addition to other credit/debit-card regulations, gift cards generally don't support "charge backs" (as they generally don't have the infrastructure of the full credit card system and the merchant banks) so can be in some cases used as an exploit for future fraud with the receiving vendor.
> has broad (and cross-border) value
I’m wondering if this is the primary use case and that’s why I don’t really get it? I see the online aspect, but it comes with a whole other set of problems that for most cases it’s hard to imagine are easier to deal with than exchanging cash. But a way to send money across borders without any controls I can see why that might be popular. Hard to tie that back to advice the AARP should be giving though.
Cash doesn’t require in-person exchange. Western Union is cheap. I grew up with poor family, that’s how they bummed money remotely.
Some of the prevalence of gift cards in corporate culture is loopholes and silliness in tax codes and anti-bribery laws. Giving any cash to an employee counts as bonus income and needs tax withholding. Giving gift cards under certain values to an employee is a gift to the employee that doesn't count as income (and, worse, in some cases can be expense reported for a tax advantage as a cost of doing business, especially gift cards to restaurants where it may be assumed it is for a "business meal").
In a different direction, giving cash to a partner/vendor/competitor is pretty obvious to many laws as a bribe. Giving gift cards more resembles gifting swag or paying for a meal and is sometimes considered "allowed". Different companies have different views on that loophole, but some companies do take advantage of it. Enough companies at least did at one point that the "CEO is in a high-powered meeting and needs gift cards immediately" came from somewhere and it was probably that, wining and dining partners/vendors/competitors in "legally distinct from but quite resembling bribes".