I see a lot more supermarkets – and other stores, for that matter – are selling gift cards for Blockbuster, Sears, gas stations, Barnes & Noble, and other stores that have no apparent relationship to the supermarket.
How do these businesses make money on the sales of these gift cards? Obviously, if someone uses a Sears card, Sears will get a slice of profit from whatever is bought. But does Sears then give a kick-back to Safeway for selling the gift card?
Also, how much do supermarkets make on the sales of these gift cards?
My guess is the company that makes the gift cards ‘rents’ the shelf space at the supermarket. In other words, they pay the supermarket money up front to display their cards near the register.
Of course, I could be way off base.
Well, after searching via Google, it seems as though I am wrong, at least for Publix markets:
I would have thought that they can buy them at a slight profit, given that the companies in question make some money just on the cards that are never used.
If you want to give $50 to each of your 6 nephews, for example, and don’t have $300 cash, you can either take a $300 cash advance off your credit card, typically at painful rates, or just buy 6 $50 cards at regular purchase rates. You might even get a cashback bonus (like with Discover) or airline miles.
Nice little win-win for everyone. Your nephews get $50 cash equivalent (since Visa’s accepted pretty much anywhere) and you get miles - maybe even enough to put you over the threshold for a free first class upgrade on your next flight.