A questioner writes asking: “What is the Islamic legal characterization (fiqhi takyeef) of a gift card? Do the rulings (Ahkam) of currency exchange apply to a gift card? Ex: Can i sell 100 dollar gift card for 90? Would that be impermissible because of inequality?”
This is a great question.
To understand the answer, we first have to understand that there are different ways in which gift cards were characterized, based on the information available to scholars at the time they were asked. To understand this question as well, I find it necessary to mention that the characterization of gift cards under Islamic law is contingent on the statutes and regulations that dictate how they are issued. Because I am a resident of the United States, my answer and the opinion I hold below is only applicable to the United States. I say that, because other countries and regulatory systems may differ. For more information on the relevant state laws on this topic, see this link:
http://www.ncsl.org/research/financial-services-and-commerce/gift-cards-and-certificates-statutes-and-legis.aspx
The three general characterizations of gift cards:
Below I mention the three general responsa to how gift cards are characterized. One characterizes them as a loan, the second as same-as-cash, and the third characterizes them as either same-as-cash or representative of a good or service, depending on the issuer.
1- First legal characterization: That it is money that you are loaning the issuer. This would mean purchasing a gift card for less than the face value would be impermissible, as that would entail the creditor (in this case the purchaser) benefiting from the difference between his loan ($90) and the face value of the card ($100). This would be haram.
2- Second legal characterization: That a gift card is same as cash, and the amount is simply held for the card holder to use at another date. In this case, selling the value of the card for the same currency that it was issued in would not be allowed, as the rules of currency exhange would apply here.
3- Third legal characterization: Gift cards are of two types:
A- certificates that are honored upon presentation by multiple, unaffiliated sellers for redemption of their cash value. These are generally issued by financial institutions and functions as a electronic payment device for the cash value that, depending on the card that be re-used and re-loaded on a pre-paid basis. These are many times called “General-use prepaid cards” legally even if the marketing material connected to them call them “gift cards.” These cards take the ruling of same as cash, and so should be traded at par value when purchased with the same currency they were bought with.
B- certificates that are honored upon presentation by the single merchant or affiliated group of merchants for goods or services. This purchase of this card creates an obligation on or a promise from a merchant or group of merchants to provide goods or services at a future date. These cards represent the obligation to provide goods and services up to the cash value originally purchased, but are not in themselves same as cash. Merchant(s) who issues these cards are not obligated to redeem them for cash unless they are of negligible amount, usually $10 or less.
This means that such a card represents a good or service provided by the merchant, and therefore is a good in and of itself. Because of that, it is permissible to buy them for less than face value and sell them for more than face value, as they do not represent an electronic means of purchase which is same as cash.
My Opinion on This Matter
It is my opinion that the third approach above is the closest to the reality of how gift cards work. If they are pre-paid and issued by a financial institution then they same-as-cash. This means you cannot buy or sell them for the same currency they represent, $90 USD for a $100 card would not be allowed as this constitutes Riba, which is forbidden. If you purchased a $100 CAD gift card for $90 USD, this would be allowed as long as it is a spot transaction.
If the card is issued by a merchant or merchants for good and services they offer, then it is in of itself a good to be bought or sold, and therefore you can buy it for less than face value ($100 USD card for $90 USD, for example) and less it for more than face value ($100 USD card for $110 USD.)
This differentiation takes into consideration how and why these cards are issued and how they function as well as the relevant Islamic legal principles that guide those realities.
And God knows best.
