In India, gifting is a wide spread phenomenon. You give gifts on birthdays, when a child is born and on other less happy occasions like marriages as well. Buying physical gifts from malls and kirana stores is most common; some parents and grand parents have upped the ante by gifting life insurance policies especially from LIC. Another avenue less explored is the world of credit cards. A prepaid gift card can be the right substitute as well.
Let us see the various options-
What are prepaid gift cards?
Such a card is similar to a credit card but is actually a prepaid card. The person giving the gift has to pay some amount to purchase or load the gift card. Much like a credit card, a magnetic strip at the back stores this amount used to load the card.
Since the amount has to be paid upfront, it is “prepaid”.
When you gift away this gift card to someone, they can use the charged up gift card to spend that amount of money. It is much like gifting a gift certificate. Since most of the gift card issuers have tie-ups all over the country and across a wide spread of vendors, you can use these gift cards easily to spend your money on a variety of things of your choice.
Every time you purchase something, the amount is deducted from the gift card and once you exhaust the total limit on the card, you can simply dispose of the card. Needless to say, unlimited transactions can be done on the card till the limit is all used up.
Since the card is meant to be used for gifts, you cannot use it to withdraw cash. Most of the gift cards will come with an ATM pin, Internet banking facilities and even a tele-banking pin to check for balance and see the transaction history.
To buy a gift card, you have to fill up a form and provide your identify proof and residence proof. Many issues like banks allow you to buy these online also.
Why use them ?
Such cards are better than carrying cash as cash can be cumbersome to handle and one can lose it as well. Cash is also not the in-style way to gifting anymore. A polished prepaid card is safe and if stolen, the bank can help to block it to avoid misuse.
Gift vouchers are also an alternative but then they have limited merchant outlets where they can be used.
Such cards can also be custom tailored to meet specific needs. By adding a custom message or name on the front of the card, it can make for an individualized gift.
Using a gift card is meaningful when you do not want to give cash as gift to someone or you yourself do not have a savings account, which is seldom the case.
Prepaid Cards – Option available in India
Here are some of the cards available in India.
ICICI Bank Gift Card – This is available in any denomination of your choice and is between Rs 5,00 to Rs 50,000.
Axis Bank Gift Card – This is a VISA card. You can load any amount between Rs 1,000 to Rs 50,000. Issuance fees are Rs. 100 + taxes or 1% of the amount being loaded whichever is greater.
Central Bank of India Gift Card – This is a master card and available for any amounts between Rs 5,00 to Rs 50,000.
SBI Gift Card – This is a VISA card available for any amounts between Rs 5,00 to Rs 50,000. The card is valid for 1 year from date of issue.
Dhanlaxmi Bank Gift Card – This is a VISA card available for any amounts between Rs 5,00 to Rs 50,000 in multiples of Rs 100.
HDFC Bank Giftplus Card – This is a VISA card and valid for 1 year. Charges are Rs 100 for issuance.
The market for gift cards and vouchers in India was sized at $403.8 million in 2011, with a 30% growth rate. That indicates the potential which gift card issuers have. A prepaid gift card is a very personal and safe way of gifting but not very rampantly used in India.
Have you used it ever ?
Hi,
Gift card is good option but it used only for expenditure not for saving. If some body gives money as Gift, it can be saved for future purpose. As I did in my case, I have deposited all the gifted money of my child into saving account and after that I have made FD from it.
The question is how often do people give cash as gift and how often do people save it ? I never received cash as gift actually, I need to befriend your friends !
Seems like a good idea. Save the trouble of thinking up a right gift! I just cant get it right.
I dont like the issuance fee though. Many stores have gift vouchers. If we know or can find out the favorite store of giftee (is that a word?) we can always work out a gift voucher arrangement and avoid the fee.
@ Kranti Goyal: Cant always gift money to everyone.
I am agree with you that you can’t always gift money.
Yeah actually that can be done as well.
But a gift card can also serve our kids as a limited credit card – they can use at ATMs, check online statements – another opportunity to teach kids about money.
I have never used it but sounds like a good alternate to cash. I have been gifting vouchers so far but rightly pointed they are for a particular store and does not provide much variety.
So, can these be used at any store like a mastercard or visa credit cards? Any limitations to be aware of apart from the fact we may have to pay a little extra for the card?
So they cannot be used at any stores but at most of them, the website shoudl be able to provide the stores of usage, if not the customer service chaps will.
I think it is a perfect gift as you can use it at multiple places. With a gift voucher, it can be used at only 1 place.
So how do you purchase these? One has to go to the branch or there are other ways like online order or something?
You can do so at the branch and even online. The banks have websites that allow yo to do so.
@TheWealthWisher,
Very good and detailed analysis, liked it. Wow $400 million market in 2011 alone, that’s quite a lot of money, people are becoming wiser. I have heard about them but never used it. It is better than gift vouchers, I have been receiving gift vouchers in 500, 1000 denominations but most of the time i don’t find good products which meets my requirement of that value and either have to put in more or leave some difference. With prepaid card that won’t happen, should give it a try.
But would it be a hassle to manage gift cards if you receive 3-4 as gift? I mean checking the balance/remembering the login details/pin. Also will the balance amount lapse after one year if we don’t renew the card?
Good point, imagine you receiving 10 gift cards from 10 different people for 5 different banks .. 😀
So that is like having 10 credit cards. I think one will be urged to spend all of it away. I don’t see that as a problem – I would buy a heavy ticket item as swap almost all of them there 🙂
Yes the balance usually lapses as cards are not renewed nor topped up by most of the issuers.
Managing gifts in abundance can always be a problem but I personally have never been in that situation before so cannot practically comment.
That’s a drawback of balance getting lapsed. I think they should have an auto-renewal feature. Many times people would forget that their card has expired. I have forgotten a couple of times that my debit card had expired and moreover the bank also did not bother to send one.
Consider it like a gift voucher. Once expired it cannot be used so person has to be careful.
Debit card is renewed anytime because that’s an ongoing relationship between bank and the customer.
I didn’t know about this, it looks good, will give a try next time 🙂 and see how’s the experience.
More than $400 million is a good number in India, when this got started, is it last year…..
Suppose i have account in HDFC, so i will have facility to give someone a gift card.
Say for e.g. i am gifting 5K gift card to my friends.
So now that 5K gift card will work for him like virtual credit card?
Will he able to purchase online/swipe at retail store to buy something?
Does he need to follow any procedure to activate it?
You can buy a gift card from any bank – you do not need a savings account in that bank in order to buy the card.
It works like a virtual credit card and you can use it online and in retails stores – yes your understanding is correct.
Activation, I guess happens when you buy it, I am not sure whether one needs to do anything special for that. If you try it out, let us know here.
I wont recommend HDFC Gift Plus card as Bank wont renew it. Validity is for 1 year. One generally wait for good occasion to use and usually forgets and 1 year is too short as validity. Please dont use HDFC GIFT Plus card if they are giving 1 year validity. Take cards which has 5 years of validity…….. in event of Lapse, we personally requested HDFC bank to renew it and they did not do it. It is LOOT….It is not small money …. it was 10000 rs gift card……… RBI should take note of this and I would like to know who is responsible for stopping this LOOT of common people and this illogical unaccountable money. I am now of opinion that HDFC is becoming old ICICI now………. People are smart enough to understand…………….
Probably wise to read beforehand that HDFC Gift Plus have a one year validity. If you wanted to take one with 5 years, then this wasn’t the one for you.
I have a HDFC Bank Gift Plus card of worth 10k . It was taken in May 2013 . I was under impression that the validity of the card is for 1 year . But it is printed on the card that the validity is only till Sept 2013 (i.e for 4 months ) When i try to swipe the card now, its not working . I dont know what to do now 🙁 Please advice
@Vamshi,
Looks like the card is expired, I doubt you can do anything now.
Please contact the banks customer service.
Rakesh
How to convert the gift amount into cash? Dont give me a NO for an answer please. The amount is more than 30K.