What’s up with Gift Card Resale Rates?

Introduction

The gift card resale market for most major bulk brands has been turned on its head recently, which has had ripple effects on the fuel points markets:

• BestBuy, Home Depot, and other bulk rates have fallen to new lows, down 3-6%
• Kroger fuel point rates have risen to record highs, up nearly 50%

What’s even going on? The answer with all things gift cards in 2024 always comes back to the Big Pepper Trifecta: for example, news at Stephen Pepper at GC Galore, or the Pepper Rewards app.

The Temporary New Kid in Town

What’s Pepper Rewards doing that’s disruptive? It’s right there on their web page front and center as the first text you see:

“New users even get 10% back for their first 15 days of shopping on yes… EVERYTHING!“

Pepper sells BestBuy, Home Depot, airbnb, and other gift cards, and yes with the right credit cards you earn even more rewards for buying through Pepper, so it’s easy to sell a BestBuy gift card to someone for less than normal and still take a big profit, which turned the market toward a local minima for resale rates on those cards. (Side question: What’s a new user anyway?)

Kroger fuel points supplies have fallen off a cliff because they’re normally earned by buying bulk gift cards during a 4x fuel points sale, and regular suppliers aren’t out there doing that because gift card resale rates are low. If we channel Economics 101 for fuel points: falling supply means increased prices due to supply shock.

How to Play It

In the post-modern economy, the role of FinTech companies observationally is to transfer money from venture capitalist (VC) bank accounts to consumers’ wallets, and that’s almost certainly what’s happening with Pepper. The excess supply of the $23 million in VC money invested into Pepper will dry up eventually, which probably means rather soon in practice. In the mean time, gift card resellers that want to weather the storm have a few plays:

• Hold bulk gift cards for when Pepper inevitably runs out of money and rates rise, but sell fuel points now
• Buy gift cards for home or business use at Kroger and sell the fuel points now
• Switch to Pepper and forgo fuel points, and use someone’s referral link to make their day
• Switch to another manufactured spend technique all together

There’s always a play; Always be probing.

The third pepper in the Pepper Trifecta currently skewing the gift card market.