Abstract: A gift card processing system and method utilizes a clearinghouse to bank, manage, and distribute the gift funds. The card is issued for contributing towards a transaction at a specific issuing merchant. The information (card reference information, value, and issuing merchant) is uploaded to the clearinghouse. The clearinghouse banks the monetary value until the card is used for a transaction. An exchange rate is established for use of the card at an exchange merchant, allowing the cardholder to use the card for a transaction at the exchange merchant. Upon completion of an exchange transaction, the clearinghouse provides payment equaling the amount transacted by the card, including the deducted exchange rate and any respective clearing fee. The balance of the banked card value is provided in payment to the issuing merchant.

Abstract: A method of redeeming a gift card having an associated programmed monetary value and incentivizing a user to purchase goods and services in an amount exceeding the programmed monetary value includes reading the identity of the gift card presented by a user and associating the gift card with a stored monetary card balance. The purchase amount of the user's desired purchase is determined and then compared with the associated card balance. A balance owing in excess of said associated card balance is calculated and the balance is then discounted by a predetermined percentage. Finally, payment from the user of the discounted balance owing is received. The system can include a registry to enable multiple subsequent discounts for a predetermined number of discounts during future purchases through the merchant or merchants.