Closed loop gift cards provide a convenient payment type even for cardholders with bad credit history, who cannot hold payment cards of any other types. Closed loop gift card holder has all the cash remaining on the card at his or her disposal, however, the merchant does not have to pay any merchant fees for gift card processing. Gift card processing, in its turn, can be handled by a third party, by the payment gateway, or by the merchant’s own payment system. Third-party processing requires less efforts from the merchant or gateway. On the other hand, in-house processing allows the merchant to get revenues from the unclaimed money, remaining on the gift cards, which are not fully redeemed.
Read more about closed-loop gift card processing in the respective article on #Paylosophy which is available here.