Gift Voucher

When a gift voucher is issued, the retailer accepts money, in return for the voucher. The voucher is a form of scrip. In a sense, before the scrip is used to purchase from the retailer which issued it, there is an increase in the amount of money in circulation. This is because the scrip has a similar value to actual money and maybe exchanged for good or money in transactions outside of deals with the issuer. At the same time, the money originally used to purchase the gift voucher is still in circulation.

For example, if Tom purchases a voucher from Amazon, Tom has a gift voucher which he may exchange with Dick for a screw driver if Dick wishes. Amazon may at the same time send the money to one of their suppliers.

Gift Vouchers

Dick will only accept Tom’s gift vouchers if he expects to use the voucher to make future purchases. This is exactly the same situation as with cash. This is why creating vouchers, is similar to printing money. Unlike cash however fewer people will accept a gift voucher as payment as they may not personally see a value to it, or may not believe they will be able to exchange it for good as simply as they would with cash.

The gift voucher holds value for as long as people believe it has value. The same is true of cash or any item which can be used as currency.

The main purpose that money has over other scrips such as vouchers is that the money is legal tender. This means that by law, it cannot be refused as a payment of debt. For this reason, as long as law persists, money will hold a value.