What is Closed-Loop Gift Card in Retail? Explained

A closed-loop gift card is a form of prepaid card that is typically issued and accepted by a specific retailer or a group of affiliated merchants. Unlike open-loop gift cards, which are issued by major credit card companies and can be used at various retailers, closed-loop gift cards are limited to use within the issuing retailer's network. These cards are a popular choice for businesses as they promote brand loyalty, encourage repeat purchases, and provide a convenient gifting option for customers within the specific retail ecosystem. Closed-loop gift cards often come with additional features, such as loyalty points or special discounts, enhancing their appeal to both retailers and customers.