![]() One example he frequently used was that McDonalds sells most of its milkshakes not to children as a dessert but to adults early in the morning. The job to be done, or, users are less irrational than believedĬlayton Christensen, a Harvard Business School professor sadly no longer with us, popularized a framework for thinking about products called “jobs to be done”, which helps to conceptualize rational user behavior that looks surprising. There are also some much quirkier options, including one which deserves an issue for itself as some point: “ Medicare pays doctors using pre-paid gift cards” is certainly the most surprising sentence I’ve read recently, and being unsurprised by wildly off-label uses of payments infrastructure is my job. Amex Serve) are sold as financial facilitators directly to the end user they effectively function as simplified bank accounts. Some are sold primarily for the traditional gift card use case, to enable non-cash transfers of funds in a convenient physical or electronic format between people who know each other. There is more product differentiation in open-loop gift cards than in closed-loop cards. (As always, there’s a fascinating level of detail hiding behind the word “approximately.”) Open-loop gift cards are issued under the aegis of a payments network, like Visa or American Express, and are approximately as widely accepted as other cards carrying the same brand, not just with the company which directly sold them to the customer. The industry taxonomy for gift cards (and gift certificates, and pre-paid cards, and similar instruments) primarily splits them into open-loop and closed-loop systems.Ĭlosed-loop gift cards are the classic retailer gift card, where someone buys a known value of future goods/services, typically paying 1:1 in cash, and those goods/services only come from the business which issued the card. How the payments industry thinks of gift cards For when you want to give someone money, except worse.” Like many topics in financial infrastructure, they’re a fascinating Gordian knot of user needs, business incentives, government regulation, and infrastructural weirdness. ![]() There are few things comedians and personal finance writers agree on, but one comes up every holiday season: “Gift cards. ![]()
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