Pre-load and Gift Card Overview

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What is a Stored-Value Card?

A Stored-Value Card (SVC) is a payment card with a monetary value stored on the card itself, not in an external account maintained by a financial institution. This means no network access is required by the payment collection terminals as funds can be withdrawn and deposited straight from the card.

 

Simplified: Stored-Value Cards refer to Preload Cards as well as Gift Cards (most common).

 

Preload Card

A Preload Card is when a customer loads money onto their account so that they can use that balance to pay for their orders. You'll see Preload Card systems on apps like Starbucks. This is particularly useful for customers with consistent spend habits that want to set budgets for themselves as well. This system allows for restaurants to collect money from the customer ahead of purchase, and pay less in individual credit card processing fees.

 

Gift Card

A Gift Card is when a customer purchases a stored-value card for another person. The balance is maintained on the card itself (rather than on the customer's account) and can be passed around to any number of people.

 

How do Stored-Value Cards work with Lunchbox?

Preload

A customer can purchase Preload balance when logged into the mobile app. The balance they purchase is loaded onto their account and is automatically applied at checkout. The balance that can be loaded is a custom amount, set to require a minimum of $10 to preload.

 

Gift Card

A customer can also purchase Gift Cards when logged into the mobile app. The value of the gift card is custom, with a required minimum of $10. Gift Cards can be set to a recipient's email or phone number, with a name and optional message attached. The individual purchasing the Gift Card must do so with their saved card on file.

 

Gift Cards will be sent to either the recipient's email or in a text message to the recipient's phone. The email contains all the details of the Gift Card, as well as functionality to open the Gift Card in their web browser. The text message contains the following text: "You received a gift card to {Insert Brand Name} for ${Insert Gift Amount}" along with a link to see the gift card in their mobile browser.

 

This Gift Card can then be redeemed by copying the 16-digit Gift Card number and pasting it into the redemption field on the My Balance screen of the mobile app when logged in. This will transfer the funds from the Gift Card and move it to the customer's Preload balance card. The funds can then be used for online orders and are automatically applied at checkout.

 

Limitations

  • Lunchbox Gift Cards and Preload Cards are purely digital, there are no physical gift cards or Lunchbox Gift Cards.
  • Gift Cards can only be used by redeeming on the app, thus transferring the gift card to a customer's Preload balance.
  • Gift Card programs that are powered by the POS (i.e., Toast Gift Cards) cannot be redeemed on the Lunchbox apps or websites.
  • Gift Cards can only be redeemed by copying the Gift Card number and entering it on the app when redeeming on the My Balance screen.
  • Gift Cards can only be used with Lunchbox Payment Processing (Stripe Enterprise). They cannot be used with Stripe Standard, Square, Seamless Payments, or any other processors. Customers can only purchase Preload balance and Gift Cards when logged in, they cannot be used for purchases by a guest user at the moment.
  • Customers can only pay for Preload balance and Gift Cards with their primary credit card on file.
  • Gift Cards and Preload balance can only be purchased on App at the moment.
  • Gift Cards can only be viewed in email or when clicking a link to a Gift Cards and it opens on the web.
  • Gift Cards cannot be opened in-app. They can be purchased and redeemed in-app, just not purchased.
  • Preload balance and Gift Card purchases require a minimum value of $10 (in order to keep payment processing rates manageable).
  • Preload balance can only be auto-applied at checkout.

 

Reporting

Lunchbox Stored-Value Cards are operated as a Closed-Loop Stored-Value Card.

Pre-Load_and_Gift_Cards-4.png

 

  • What does Closed-Loop mean?
    • It means that when a Gift Card is purchased or Preload balance is loaded, the funds from the purchase are directly transferred to an escrow bank account for the Restaurant (not to any individual location).
    • This escrow bank account is set up by the brand and will be configured separately from any location on the Lunchbox Payments dashboard.
  • How are Closed-Loop cards different from Open-Loop cards?
    • Closed-Loop is different from Open-Loop cards (i.e., Visa or MasterCard gift cards) in that for Closed Loop, the funds are always in the possession of the brands. For Open-Loop cards, the funds are transferred to the Card Issuer at purchase (i.e., Visa, MasterCard, etc) and are only disbursed to other businesses when a purchase is made at that business.
    • Open-Loop cards come with a litany of restrictions, regulations, and PCI compliance.

NOTE: With Stripe Connect Custom (e.g., Stripe Enterprise, Lunchbox Payment Processing, Lunchmoney), we are able to host a Closed-Loop card solution and maintain full PCI compliance since Lunchbox will not be holding money on behalf of the restaurants at any time.

 

Application - Stored-Value Cards at Checkout

Stored-Value Cards are auto-applied at checkout, and applied to the balance of the order:

  1. Post-discount
  2. Post-loyalty
  3. Post-service charge (i.e., delivery fee)
  4. Post-tip
  5. Post-tax

Essentially, the Stored-Value Card pays for the final total of the order, after deductions and additional charges. If there is a balance on the order after the Stored-Value Card is applied, then the system will charge the customer's card-on-file for the remaining balance.

 

When the purchase is made using the Stored-Value Card, the funds in the Restaurant's escrow account should be earmarked for that location which it was spent at. When gift cards go live at your restaurant, Lunchbox will provide the Admin dashboard reporting necessary for the restaurants to settle up each month.

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Application - Maintenance Fees and Expiration Dates

Lunchbox Stored-Value Cards have no maintenance fees, as well as no expiration dates.

  • Maintenance fees are sometimes used on Stored-Value Cards to decrease the amount of funds left on the cards so that the Restaurants can recognize the revenue if the customers never spend the balance.
  • Expiration dates are used for the same purpose, to drain the balance from the cards so that Restaurants can recognize the revenue sooner.
  • Maintenance fees and Expiration dates were pretty commonplace not long ago. However, due to a wave of regulation introduced in the last 10 years, many states (California, Delaware, Maine, and more) have begun to crack down on these practices in favor of the consumer.
  • For this reason, Lunchbox does not enforce any maintenance fees or expiration dates, and thus we avoid any regulation related to it.

 

 

 

 

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