How Gift Cards Work Could Soon Change
New Reserve Bank Rules Could Change How Gift Cards Work
Gift cards could soon come with more strings attached.
The South African Reserve Bank (SARB) wants to regulate some types of gift card the same way it regulates financial products.
This is because the law we currently have for gift cards was written for a simpler time. The Consumer Protection Act says gift cards must last at least three years and that your balance cannot just vanish, but it assumed the same shop was both selling and redeeming the card.
‘the law we currently have for gift cards was written for a simpler time’
These days, cards are far more flexible and can often be used in many places or even loaded with extra funds.
The Reserve Bank says this flexibility changes the game. If a card can be spent at more than one store, handed to a friend, or turned into cash, then it may need to be registered with SARB and follow stricter rules.
Different Rules For Different Cards
The new rules could feel very different behind the scenes for the people issuing them.
It is also hoped that it will combat the use of gift cards to circumvent regulations about money laundering, funding terrorism or crime.
It looks likely that businesses will face limits of R5000 a day or R50 000 a month, have to keep client money in special accounts, and follow the same identity checks and reporting rules as used by banks.
Not all cards will be treated the same. Simple single store vouchers will stay under the Consumer Protection Act with the same protections we know, while shopping centre cards, airline cards, and reloadable vouchers will fall into SARB’s system.
For consumers, the basics will not really change if you are buying a single store voucher. You will still get three years to spend it and your balance will be safe, but broader use cards may come with new limits or changes as businesses have to adjust to stricter rules.
The Reserve Bank says the aim is to make payments safer and reduce risks. That may mean gift cards split into two worlds: the simple and familiar ones on the one side, and the more complex ones that behave more like bank products on the other.
