The precarious economics of gift cards

Unless you receive gift cards for places you regular spend money in, they can feel like a waste. And they are for many as Colin Nagy’s The Gift Card Economics Edition explained:

Walk down an aisle in any CVS and you’ll see a huge wall of gift cards. Often bought when you don’t have the time or energy to think of a better present, they are a mainstay of modern life, with Americans purchasing around $171 Billion worth in 2019. 

They are also incredibly good business for the brands that issue them. According to a deep-dive on the subject in the Hustle, “often, they go unused — whether we lose them, forget we have them, let them expire, or fail to spend the full amount that was gifted. And when that happens, there’s only one winner: The companies that sell the cards.”

It’s short and sweet but definitely worth a read as it shows how places like Starbucks hold liabilities on their gift cards. Billions worth.

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