A gift voucher is a type of scrip. It is therefore not legal tender but can be used in specific circumstances in exchange for goods. Gift vouchers can be used to purchase good from a particular retailer or group of retailers.
The reason that gift vouchers are used is a psychological one as there are no logical reasons to purchase gift vouchers unless the face value of it is greater than the money exchanged for it. People often purchase gift vouchers as gifts (hence the name) as it is seen to be more thoughtful than giving cash as a gift. This is because the giver must have made an effort to collect the gift voucher, rather than simply handing over cash they already had with them.
Another reason for the popularity of gift vouchers is that people see them as a way of forcing the receiver to exchange their gift for something more enjoyable than they might if it was cash that had been given. For example, cash is more likely to be spent on grocery shopping, whereas vouchers are more likely to be spent on luxury items.
A third reason for vouchers to be given rather than cash is that the giver prefers to know that the receiver will think of them and appreciate the item that they are purchasing more as a gift.
One downside of gift vouchers is that in many cases, money is exchanged for a voucher which can purchase no more than the money could have purchased. Also, the keeper of the gift takeaway voucher is tied to using that voucher with a limited number of stores whereas money could have been used for any transaction.
Another disadvantage of gift vouchers is that not all are used. This could be because they are simply forgotten about, or the owner does not wish to purchase from the particular store. On top of this, some gift vouchers have expiry dates and therefore become worthless if unused by this expiry date. Another possible cause for gift vouchers to lose all value is if the firm issuing the voucher goes out of business. This means that the scrip is lost however the money which it was exchanged for is still in circulation.
It is said that 30% of all money spent on gift-vouchers is wasted as the gift vouchers are never used or expire. It can be said that gift vouchers are a ploy to encourage consumers to spend money where they would not normally, or to increase the amount they would spend. This is especially true if the voucher comes with an expiry date; forcing consumers to use the scrip earlier than they may desire.
It can be argued that expiry dates are necessary for retailers to keep their accounts. When they receive money for a voucher, they must take into account that at a later date, they must give provide an item or part of that item in exchange for the now worthless voucher. A retailer with tight profit margins could face difficulty if vouchers which had been presumed to have been lost many years ago, suddenly reappear with a customer expecting to “cash-in” their vouchers.
Vouchers have several purposes albeit purely psychological. Giving legal tender as a gift makes more sense. However the receiver may not be as grateful when they make their purchase or perceive that less effort was made in providing the gift.