Advanced Gift Card Arbitrage & Reselling – Bulk Accounts & Finding the Best Deal

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From Shawn: Gift Card Reselling has really become a hot topic in the miles & points world and I wanted to bring you a more advanced post on the topic. For that reason I asked Noah from Money Metagame to write about becoming a bulk seller. He is a newer blogger, but the quality of his content and his knowledge are impressive. Enjoy!

Introduction

Hello Miles to Memories readers, Shawn was kind enough to invite me to do a guest post and I thought I would take the opportunity to expand your knowledge on gift card arbitrage.  My name is Noah and I write and manage Money Metagame where I talk about churning, financial independence, gift card arbitrage, and many other ways to optimize your finances as a whole.  I just started in the credit card game about 10 months ago, but after reading up on the topic via various blogs and forums, I dove in head first.  Luckily, I have wonderful fiance who goes along with my crazy ideas and between the two of us, we’ve signed up for over 20 credit cards in that 10 month time span.  More recently, I started an LLC dedicated to buying and selling gift cards and have moved over $20,000 worth of gift cards since I started.  Enough about me though, let’s talk about how you can take your gift card game to the next level by becoming a bulk seller.

gift card reselling

A Quick Recap on Gift Card Arbitrage

Shawn wrote an introduction to the topic, so I highly recommend you read through that for the basics.  To quickly recap though, here’s the standard procedure for practicing gift card arbitrage:

  1. Check the current gift card sell rates at Gift Card Granny
  2. Find a gift card you can buy for under that rate and buy it
    • Don’t forget to subtract shopping portals, store bucks, and credit card returns from the buy rate!
    • Check physical vs. digital and make sure you can sell that type at the rate you want
  3. Wait for the gift card to arrive
    • Almost no wait if it’s a digital card!
  4. Sell the gift card by either mailing it in or submitting the code and pin digitally
  5. Wait for the payout and count your money

Just repeat that for as long as you can find deals.  Amex Offers, Bank Amerideals, ebay sales, Staples, and big grocery stores are a great place start, but with gift cards being an over $100 BILLION dollar industry, just about any store will offer gift card based deals from time to time.  Heck, most of the deals I just linked are just from the past few weeks!

So Why Become A Bulk Seller?

gift card reselling

If you start taking advantage of many gift card arbitrage opportunities, you might run into limits with unloading them. At the very least, the gift card exchange you choose to sell to will probably start asking questions like where you get all the cards from.  Luckily, they don’t mind that you’re buying them purely to resell and as a matter of fact, they actually prefer it because they’re getting the card straight from the source.  Even if you don’t run into selling limits, you’re probably leaving money on the table by not becoming a bulk seller.  Let’s look at several of the benefits of becoming a bulk seller:

  • Higher Payouts – If nothing else, this should get your attention.  Several of the exchanges offer higher payouts for bulk sellers.  An extra % or two may not sound like a lot, but it will make a HUGE difference in your final profit.
  • Free Shipping – Several types of cards such as gas stations and restaurants typically can’t be sold digitally, so you’ll have to mail them in.  Most of the time, non-bulk sellers will have to pay for the postage themselves and that can get pricey.  Free shipping for bulk sellers will save you money on every card shipped.
  • Higher Selling Limits – I’m not sure about all the exchanges, but SaveYa for example currently limits non-bulk sellers to $300 per rolling week.  As a bulk seller, you won’t have to worry about selling limits and are only limited by the number of deals you can find.
  • Better Customer Service – After becoming a bulk seller, you will probably be given an account representative that will be quick to respond and assist with any questions or concerns you might have.  This certainly beats trying to call or email the general support line.

Which Bulk Seller Program To Choose

Everyone has their own needs, so there is no one-size fits all answer.  Here’s some things to consider before deciding which gift card exchange is right for you:

  • Bulk Seller Benefits – Check if they offer the benefits I listed above and to what degree, payout % is probably the most important, but don’t discount the others too much.
  • Minimum Sale Requirements – Some bulk seller programs expect you to sell a minimum amount per month, so make sure you’re comfortable moving that much before committing to a large number.  Not all bulk sales programs have minimums.
  • Payout Options – Some offer ACH transactions for quick payouts, some mail physical checks, and some even offer higher payouts if you want Amazon gift cards.  Figure out how you prefer to get paid, and choose a program that offers that option.

Keep in mind, you don’t necessarily have to commit all your volume to one program.  If you qualify and apply for multiple, you can split your volume according to which one pays out the highest for each brand.  No one exchange will always have the top payout for every brand, so some diversity will help your bottom line.

My Own Experience With Bulk Sales

gift card reselling

After I got comfortable flipping gift cards, I looked into becoming a bulk seller at a couple exchanges.  Glancing over the public rates on Gift Card Granny, I decided to apply for bulk sales at SaveYa and Gift Card Zen.  Gift Card Zen wanted me to commit to $5k in sales per month and I wasn’t at that level yet, so that option didn’t work out.  SaveYa on the other hand welcomed me with open arms.  SaveYa’s benefits of no minimum sales requirements, fast ACH payouts, and digital sales fit well with what I was looking for. Getting my bulk seller account up and running was a rocky process, but I’ve been selling cards without problem ever since.

About a month after becoming a bulk seller with SaveYa, I started investigating Raise and decided to become a bulk seller with them as well.  Unlike the other exchanges that pay you a fixed rate upfront for the gift cards, Raise is actually a marketplace where you set the price and get paid only after the card sells.  Non-bulk sellers pay a commission of 15% on every card, but bulk sellers get much lower commissions on most brands.  The commission varies by brand, but is generally between 6 and 13% with the more popular brands on the lower end.  I’ve had a great experience selling on Raise, and the payouts for the popular brands beat what I was getting via SaveYa.

I currently sell to both SaveYa and Raise depending on each card’s respective payouts at each.  Raise tends to win on the more popular brands such as Walmart, Best Buy, and Lowes, but SaveYa wins out for less popular brands and ones that can’t be sold digitally like Shell and Red Lobster.  After I started selling with Raise, my sales have been almost a perfect split between the two exchanges with Raise slightly ahead at 54% of my volume.  I can’t recommend becoming a bulk seller enough if you’re interesting in maximizing profit while generating a lot of credit card spend.

Thanks!

I just want to say thanks again to Shawn for letting me do a guest post here on Miles To Memories!  Myself and a couple other bloggers recently started a $20k Reselling Challenge where we’re putting merchandise reselling head to head against gift card churning.  Check back later on to see who comes out ahead in both money and time spent.  Anyway, I’d be happy to answer and questions you guys have about gift card arbitrage, bulk selling, or anything else you think I might have the answer to.  Leave a comment here and I’ll get back to you as soon as I can.


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30 COMMENTS

  1. Noah, this is a great summary. Are you actually making a small profit, or just generating a lot of credit card spend (and bonuses) and hopefully just taking a small loss?

      • Hey Noah, that’s exciting that you’re having so much success flipping gift cards. In the beginning of your post, you mentioned you started a LLC. In my state (MA), just filing the annual report costs $500/year, not to mention the fees associated with your LLC formation, etc. They eat up your profit very quickly.

        • Wow, $500 yearly for the LLC filing is crazy. Over here in WA it’s only $71 for the annual filing, so it won’t take away too much of my profits. Luckily, it’s entirely possible to resell gift cards without forming an LLC by just doing it as an individual or even just a sole-proprietorship.

        • Haha wow, ohio is 100$ and your set for life (I atually think it is 99$). The kicker is that you can pay it with credit card free 😀

  2. Hi Noah, what kind of information is required to become a bulk seller? Do vendors allow an individual to become bulk seller?
    Thank you

    • Hey Agus,

      It’s definitely NOT necessary to be a business entity in order to become a bulk seller. In fact, I became a bulk seller with both SaveYa and Raise before I even had the idea to create my own business based around gift card sales.

      As for the information they request, it’s the standard stuff you would fill out to sign up to buy cards (name, address, cc #, etc.) and some more detailed information including your SSN (not sure if they send 1099’s yet), bank account info if you want to use ACH, and a quick questionnaire about where you get the gift cards and how you validate them.

      • Hi Noah,

        This is a great post with lots of great information! Was there a reason why you set up a LLC as opposed to staying a sole-proprietor? Any benefits to this? Tax purposes? Sorry if this is getting too personal – I’ve been considering getting into reselling, and your post truly sparked my interest. I’m also a WA resident (albeit living abroad), so I like the low fee for setting up a biz.

        Thanks in advance – appreciate all the info AND you taking the time to write this up and answer all the

        • Good question,

          The primary motivation for setting up my gift card business as an LLC versus a sole-proprietorship was the liability part. While I dont expect to run into any legal trouble, I’d rather separate my personal finances as much as possible from the business. Another benefit of the LLC is I’ve heard it’s much easier to get approved for business accounts (cc, bank, etc.) with a registered LLC over a sole-proprietorship. I’m not sure how true this is, but it is something I considered.

          Taxes and most other factors are identical between the two types, so the primary consideration is cost of the LLC versus the potential liability benefits it offers. Everyone’s own situation will be different.

  3. One helpful tip is to actually check the gift card reseller’s website for the payout rate before making any GC purchases and don’t rely only on what GiftCardGranny is showing. I’ve seen many times where GiftCardGranny’s rates were either too high or too low.

    • This is a good callout, GCG is usually up to date, but they trail behind when rates are updated and are occasionally just plain wrong. It’s a good resource to get an idea for what a card sells for, but not an authority, so check the buying websites if you want to true sell price.

  4. If I become bulk seller on saveya , i get better rate than the regular rate? I have about $2k worth of target GCs.

    • Currently, SaveYa does NOT offer better rates to their bulk sellers. I’ve heard this is in the works though, so I would expect this to change at some point in the future.

  5. Hi Noah,

    One question about mailing in gift cards? If you plan to sell a lot to a site that requires you to mail in the gift cards, what do you do? Do you insure the package (USPS charges a lot for that) or do you store the numbers in case the package is lost? Is there recourse with the gift card company (specifically, the one from where you bought the gift cards, but even the one you’re selling to) if the package is lost? Thanks!

    • When I sell cards that need to be mailed in, the gift card exchange provides me with a prepaid shipping label that has tracking via FedEx. In addition to that, I also keep all of the gift card numbers so that I could try to recover the cards if the shipment ever got lost.

      Be careful with trying to insure gift cards, as the shipper may not actually pay out what you expect. I’ve heard stories of UPS reimbursing for “piece of plastic” rather than the actual value on the cards. Make sure the gift card is actually insurable before paying for insurance.

      I’ve been fortunate enough that nothing has happened to any of the cards I’ve mailed in, so I can’t say what kind of recourse there would be. The place you bought them from probably wouldn’t help you because they fulfilled their end of the bargain of getting you a gift card and the place you’re selling to just won’t pay out because they never received the cards.

  6. Great piece Noah. Regarding egiftcards, does it make sense to try and sell them on ebay? Also, when selling egcs, what is the process? You just give bulk buyers the gift card number?

    • Ebay doesn’t allow the sale of digital gift cards (http://pages.ebay.com/help/policies/gift.html). That doesn’t mean you won’t see them for sale every so often, but I’d highly recommend not blatently breaking the rules. Plus ebay charges a 10% fee along with PayPal’s 2.9% fee, so it might be hard to come out ahead.

      For selling gift card codes to gift card exchanges, if they accept digital cards for that brand (be sure to check first before buying), then you simply input the gift card number and pin. Once they verify the value, you’ll be paid. I wouldn’t destroy the card right away, but be sure to put it somewhere and mark it somehow so that you don’t accidentally try to use it. That would end poorly with the exchange you sold it to.

  7. Great write up, thanks.

    I just became a bulk seller at saveya. Aiming for cardpool too, but I need clarification on the 5k requirement and if it’s a soft time frame or by month etc. I do know they won’t require monthly 5k+.

    I had a few questions for you Noah. What type of documents organizational tools do you use to keep track of everything?

    Do you set hard rules for how much you’ll float at a time?

    • That’s a good question. At the moment, I have two tabs in a larger excel sheet that keep track of all my gift card reselling. It’s evolved a lot since I started and looks pretty ugly at the moment, but it’s on my long-term to-do list to clean it up and possibly publish a template for others to use. I’m in the process of setting up a Business checking account that I want to run everything related to the business through to keep better track separate from my personal expenses, but that’s a work in progress. If you check the comments on this post (http://moneymetagame.com/churning/my-latest-get-rich-slow-scheme-gift-card-arbitrage/), I listed all the columns I currently keep track of in the excel sheet.

      As for how much I float, I have a hard rule to never have more spending on credit cards than I can cover from my checking account(s). Other than that, I don’t limit myself to a particular number. I took advantage of the most recent Amex GC deal, so I think I’m currently floating more than I ever have before. Got to spend money to make money right?

  8. Hey Noah, thanks for an interesting post! I noticed Shawn just wrote a post basically condemning this practice as one that’s too risky for him. Other than obvious things like selling gift cards as soon as you receive them to limit your liability, how do you avoid and deal with chargebacks? Especially if the company you sell to doesn’t sell your gift card themselves for awhile, are you still on the hook for the cards through that time PLUS their guarantee time once they sell the card?

    • Never buy used gift cards. That’s really your best way to insulate from any risks associated w/ gift card reselling.

      I can tell you from first hand experience that SaveYa doesn’t abide by its own guarantee and will do a chargeback on your credit card on file regardless of whether or not the customer is within their guarantee rights.

      SaveYa guarantee:

      “We offer a purchase guarantee on discount gift cards up to 90 days from the date of purchase. (This guarantee or refunds do not apply to electronic gift codes or mobile gift codes.)”

      I had a chargeback on an electronic card that SaveYa personally held for 100+ days. No notice, nothing. When confronted with my displeasure and citing their policy while asking why the communication of said issue was handled so poorly, all I received was a pasting of their terms (which ironically support my contention that they screwed up big time). So yes it can definitely happen and it doesn’t matter how big the site is.

      The only site I’ve felt was completely stand-up is Cardpool. Goes for the buying or selling end of things. The one bad card I purchased was handled properly and refunded without much need for pushing it along.

      One thing I’d suggest is to be conservative with your margins and build them up a bit if you’re worried about losing money. Certain deals won’t be worth my time if there’s not enough meat on the bone. At this point gift card reselling works fantastic as a tool for MS/Churn and as a means to an end and not an end in itself. The more birds you can hit with that one stone the better off you’ll be even if you miss a few in the process.

    • As anthonyjh21 said, if you stick to new gift cards all of the risks pretty much disappear if you’re dealing with the exchanges. As you were the only person to ever have the gift card’s number, there’s no risk of the card going bad over any time frame, so you don’t have to worry about the individual exchange’s guarantees.

      As Shawn called out in his more recent post about gift card arbitrage not being worth it, the primary problem is the very low margins for a decent amount of work. Even I’ve pulled back a bit from when I was trying to sell as much as possible to only really target the easy wins (like ebay deals). It’s good to try it out for yourself though and see whether or not you like it. Having an avenue or two to sell gift cards makes many deals and spends a lot easier to complete, often from the comfort of your own home.

      • “Having an avenue or two to sell gift cards makes many deals and spends a lot easier to complete, often from the comfort of your own home.”

        It really comes down to this. ^

        The more options (tools) you have to help meet minimum spend and/or your overall Churn/MS strategy, the better. Unfortunately the longer I’m in this “game” the more I realize that the only certainty is uncertainty and that having multiple options for MS’ing is huge.

        On that same note I’m looking into reselling (non gc) more but it’s also more time intensive and definitely more “risky” than selling new gift cards (if you compared to your return % from FBA for example). Then again I’m sure it’s more profitable if you can pick and choose your spots. I look at gift card selling as the midpoint between VGC liquidation and reselling, if that makes sense at all. Not overly time intensive (much less than VGC) but still enough margin to complete deals while making money and still meeting minimum spending.

  9. So I’m a bit confused on where you are buying the gift cards from – you are buying them from retailers? How can you get a good discount? I know that you can do something like use the Splender portal to buy a gift card from Raise.com – but I doubt you’ll be able to make money selling the same card on Raise.com again. So how exactly do you get so much % off the face value?

    • Hey Dan,

      The most common source of gift cards are from different deals and sales. Many retailers discount their own gift cards seasonally, grocery stores often have sales of different retail brands, but the one that I use the most often is ebay. By stacking shopping portals, ebay bucks, and discount ebay gift cards with already discounted cards, it’s not uncommon to get 30% off the value of the gift card.

      Shawn’s post from earlier today is typical example of where resellable cards come from:
      http://milestomemories.boardingarea.com/ebay-gift-card-sale-staples/

  10. HI Noah , i have starting selling cards on raise.com however they are asking me from where do i get these egift cards for veryfication purpose so what should be my best answer as i purchase card from my clients from paful and other portals like it.
    please suggest.

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