Gift cards are a popular and convenient gifting option, offering recipients the flexibility to choose exactly what they want. If you’re holding a gift card, you might wonder if you can use it to purchase another gift card. Specifically, if you have a Walmart gift card, can you use it to buy a different gift card at Walmart? The answer, directly from a Walmart associate, is generally no. Let’s delve into the reasons behind this policy and what it means for consumers.
Why Walmart Restricts Gift Card Purchases with Gift Cards
The primary reason Walmart, and many other retailers, prohibit using gift cards to buy other gift cards comes down to loss prevention and profit margins. Here’s a breakdown of the key factors:
Combating Fraud and Theft
One significant issue Walmart faces is related to theft and fraudulent returns. As explained by a Walmart insider, the policy is largely in place to prevent a specific type of scam. Individuals were exploiting the system by:
- Stealing Merchandise: Taking items from the store without paying.
- Returning Stolen Goods Without a Receipt: Exploiting the return policy to get store credit for stolen items.
- Purchasing Prepaid Cards: Using the store credit, often issued as a Walmart gift card when store credit-specific cards were unavailable, to buy prepaid Visa or Mastercard gift cards. These prepaid cards are essentially as good as cash and much harder to trace.
This loophole allowed individuals to convert stolen merchandise into untraceable funds. By preventing the purchase of gift cards with gift cards, Walmart effectively closes this avenue for theft and fraud.
Profit Margins on Gift Cards
Another critical factor is the lower profit margin Walmart makes on selling gift cards for other stores compared to their regular merchandise. For example, on a $25 gift card for another retailer sold at Walmart, Walmart’s profit margin is significantly less than on typical products they sell. The insider mentioned Walmart might only keep around $2.50 from a $25 third-party gift card sale.
Conversely, the profit margins on many of Walmart’s regular products are considerably higher. The associate shared examples of safety shoes and batteries, highlighting markups that can range from 30-40% or even more on general merchandise. When a customer uses a gift card to buy regular products, Walmart benefits from these higher profit margins. However, when a gift card is used to purchase another gift card, especially a third-party one, Walmart’s profit is minimized. While grocery items have lower margins, the overall profitability strategy leans towards encouraging purchases of higher-margin goods rather than facilitating the exchange of gift cards.
Store Credit vs. Gift Cards: A Slight Nuance
It’s worth noting that Walmart sometimes issues “store credit” gift cards for returns without a receipt. Ideally, these are supposed to be distinct from regular gift cards and meant for store credit only. However, in practice, if store credit-specific cards are unavailable, regular Walmart gift cards are sometimes used for this purpose. This can blur the lines, but the underlying policy still stands: you cannot typically use any Walmart gift card, regardless of its origin, to purchase another gift card.
Conclusion: Walmart’s Gift Card Policy Explained
In summary, if you’re wondering “Can I Buy A Gift Card With A Gift Card at Walmart?”, the answer is generally no. This policy is in place primarily to prevent fraud related to returns and to ensure Walmart focuses on sales that yield higher profit margins. While it might seem inconvenient, understanding the rationale behind this policy provides valuable insight into retail operations and loss prevention strategies. So, while your Walmart gift card is great for purchasing a wide array of products throughout the store, you’ll need to use other payment methods when buying new gift cards.
