Payment gateways and merchants have two options for processing closed loop gift cards. First, closed loop gift cards can be processed using a third-party issuer, such as a bank, gift card vendor, or other payment gateway company. This third-party would both issue cards and handle issues associated with acquiring. The cards may or may not be white-labeled by the merchant. This approach requires less effort from the merchant than implementing gift card processing in-house. It is much simpler for merchants and payment gateways to implement with a third party than to integrate the necessary functionality.
On the other hand, a merchant could decide that a closed loop need not involve a third party and that implementing functionality into its own credit card payment software is preferred. This approach, while more complicated, does offer some added benefits. A primary advantage of this approach is that the merchant is entitled to all revenues from unclaimed funds that remain on cards. Of course, there is also the matter of not having to pay merchant fees, while cardholders may still spend the money on their cards, just as they can with any other payment card.
To find out more about closed loop gift card processing, both in-house and using a third party payment gateway solution, take a look at the related article on #UniPayGateway. Also, visit our blog #Paylosophy.