Gift Card Fees in Canada: What You Need to Know

Gift cards are a convenient way to give and spend, but are they always free to use? In Canada, consumer protection laws regulate gift card fees, but the rules differ between open-loop and closed-loop cards. Here’s what you need to know to avoid surprises.

Closed-Loop (Retailer) Gift Cards

For gift cards issued by a specific retailer (like Indigo, Best Buy, or Canadian Tire), the rules are very consumer-friendly across most of Canada.

• No Expiry Dates: In most provinces, it is illegal for retailers to put an expiry date on gift cards for a specific good or service.
• No Dormancy Fees: Retailers are generally prohibited from charging fees for inactivity or non-use. This means your balance won’t drain away over time.

Essentially, the money on a retail gift card is treated like cash and should retain its full value until you spend it.

Open-Loop (Visa/Mastercard) Gift Cards

Open-loop prepaid cards like the Joker or Vanilla cards are treated differently under the law and are permitted to charge certain fees.

• Activation Fee: This is the most common fee. It is a one-time, upfront charge paid at the time of purchase. The fee is typically based on the value of the card (e.g., a $4.95 fee for a $50 card, a $6.95 fee for a $100 card).
• Monthly Maintenance Fee: Some open-loop cards may start charging a monthly fee if the card is not used for a certain period (usually after 12 months). This fee is deducted from the card’s balance. It is crucial to read the terms and conditions on the card’s packaging to understand if and when these fees apply.
• Foreign Exchange (FX) Fee: If you use your Canadian prepaid card to make a purchase in a different currency (e.g., shopping on a U.S. website), you will be charged an FX fee, typically around 2.5% of the transaction amount.

Summary of Fees

Fee Type	Closed-Loop (Retailer) Cards	Open-Loop (Visa/Mastercard) Cards
Activation Fee	Almost never	Yes, almost always
Expiry Date	Prohibited in most provinces	The card plastic expires, but funds may not.
Monthly/Dormancy Fee	Prohibited in most provinces	Yes, can be charged after a certain period.
FX Fee	Not applicable	Yes, for foreign currency transactions.

Conclusion:

When you receive a gift card for a specific Canadian retailer, you can be confident that the full value will be there when you’re ready to use it. When buying or using an open-loop prepaid card, however, be aware of the initial activation fee and check the packaging for any potential monthly maintenance fees. Understanding these small differences ensures you get the maximum value out of every card.

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