Do Open Loop Gift Cards Belong in the Jungle?
We are occasionally asked why we don’t buy and sell “use anywhere” Visa, Mastercard and American Express gift cards. These cards – referred to in the industry jargon as “open loop” cards – may be redeemed at any merchant that accepts Visa, Mastercard or American Express, as the case may be, as a payment option. These are different from the merchant issued “closed loop” cards we buy and sell on a regular basis … closed loop cards typically may only be redeemed at the merchant that has issued them (for instance, at Target).
There are a few answers.
Fees & Expiration Dates
First, many of these cards have ongoing fees associated with them that can reduce the redemption value over time. While the open loop industry has done a good job at making these fees easier to sort through, we don’t want any of our customers to have a disappointing experience if these fees reduce the value of the card with time. Since there are a wide variety of these cards in market, many with very different fee schedules, we have chosen not to add to the confusion. Plus, open open loop cards tend to have expiration dates, and we want to make sure that the card does not expire before you could put it to good use.
Best Deals on the Brands You Love
Second, most of our customers tell us that they prefer buying a card issued by a specific retailer. Why? Simple really – because our customers really want to shop at that specific retailer, and are looking to Plastic Jungle to make that shopping experience as valuable as possible. That’s easier for us to do with closed loop cards than with open loop.
A third reason is perhaps not so obvious, and that has to do with Plastic Jungle being a good corporate citizen. Early in our life, we did occasionally buy and sell open loop cards. But we quickly came to the realization that there really wasn’t any good reason for someone to sell us a “good as money” card at a discount. And if there wasn’t a good reason we needed to ask ourselves why someone would do so. There are several benign explanations, but one thing we did want to be careful about was that Plastic Jungle was not to be misused as a channel by which money could be “laundered”. The financial services industry is very cautious and attentive about money laundering issues, and works closely with governmental regulators to ensure that the payment systems are not misused to achieve nefarious ends. One way Plastic Jungle can play its own small role is by not purchasing open loops cards at a discount. This closes off any potential for a criminal or terrorist, or someone unwittingly working for them, to purchase open loop cards for cash, and then sell them to us for cash or check (at which point the money is considered “laundered”, meaning difficult to trace to its source). It’s a small role, but one we are happy to serve.
All that said, we are considering carrying open loop cards for sale that are not acquired from the open market, but instead are acquired directly from card issuers. These cards are not open to money laundering since they were not purchased from an individual. This also means that we can be more explicit about what types of fees may be associated with these cards and can even help you comparison shop to find the best deal. If you think this is worth us doing, please let us know by commenting below, and we will consider it.
In the meantime, we will continue to do our part in making sure that our business serves your interests above all others.