alt Hacker NewsIt would make more sense to stop offering gift cards, which make zero financial sense for the consumer, but why stop offering a lucrative product that people buy because they're bad at logic, when you can just shut down accounts and greatly inconvenience people at no cost to you?
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Gift cards are huge in the B2B business as they are used a lot as gifts from companies to employees.
It’s a financial gimmick. The company realizes the income immediately while service is rendered later. This has positive impact on the finances.
One practical reason gift cards exist is tax treatment. In the UK, small non-cash gifts to employees can be tax-free under the “trivial benefits” rules (each under £50, not cash or cash-equivalent). For owner-managed companies, directors have a £300 annual cap across such benefits. Cash or cash-redeemable vouchers don’t qualify and are taxed like salary.
> which make zero financial sense for the consumer
Not in all situations. Because of various cross promotions between car insurance, supermarket and airlines, by using gift cards for groceries I get an effective ~9% discount every time. That really adds up over a year.
For Apple and others, you can use secondary gift card market to get some discounts too, if you wanna risk it.