Open-loop vs closed-loop gift cards: where each can be spent
By SendPay Business · · 2 min read
- 1Your card appears in your app
- 2Tap it to pay in a shop
- 3See every payment as it happens
Gift cards come in two main kinds. A closed-loop card can only be spent with the brand or group that issued it. An open-loop card carries a card network logo, such as Visa or Mastercard, and can be spent almost anywhere that brand is accepted.
Closed-loop gift cards
- Issued by a shop, restaurant chain or shopping centre.
- Only work at that business or its partners.
- Bring customers back through the door, often spending more than the card's value.
- Run on the business's own systems or a gift card provider's.
Open-loop gift cards
These are prepaid cards issued by a regulated card issuer on a card network. They are more flexible for the person receiving them, but usually carry a purchase fee and sometimes expiry dates or inactivity fees, which should be clear before buying.
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What businesses weigh up
Closed-loop cards keep spending in-house and are simpler to run. Open-loop cards suit corporate rewards and incentives, where the giver wants the recipient to choose. Either way, clear terms on expiry and balance checks build trust.
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Questions people ask
What does a prepaid card cost in a year?
Add up its fees with the free calculator.
Prepaid card cost calculator →What is a prepaid card?
A card loaded with money in advance rather than linked to credit.
Prepaid cards →What is a card scheme?
A network such as Visa or Mastercard that connects card payments.
Card schemes →Read next
Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.