Visa gift card fees (expenses, interest, money, cost)

[luv4horses]

Why do gifters need to pay an extra fee to a bank for pre-paid Visa gift cards? It seems like it is unwarranted to me.

[ncole1]

Originally Posted by luv4horses

Why do gifters need to pay an extra fee to a bank for pre-paid Visa gift cards? It seems like it is unwarranted to me.

Because the institution has expenses and also seeks to make a profit. Gift cards usually are for relatively small amounts of $ such as $20 - so the interest on the money does not even cover the cost of printing the card, not to mention the administration cost of the account, etc.

[luv4horses]

But don't the institutions also need to pay a fee (1.5%) when the buyer uses Visa? Maybe not, since it is a card. I guess I was just comparing it to point of use gift cards which do not require the extra fee. For example a restaurant card. The Visa gift cards are 3.95. Thanks for the response, BTW.

[ncole1]

Originally Posted by luv4horses

But don't the institutions also need to pay a fee (1.5%) when the buyer uses Visa? Maybe not, since it is a card. I guess I was just comparing it to point of use gift cards which do not require the extra fee. For example a restaurant card. The Visa gift cards are 3.95. Thanks for the response, BTW.

They'd be paying merchant fees either way, as cash has lost popularity over the decades.