How is it that Apple can adjust the relative value of iTunes cards after purchase?

LGravy on 03/09/2014 - 15:54
Last edited 03/09/2014 - 15:55

Was thinking recently that Apple is able to do something quite odd. When you buy an iTunes gift card at $XX the money has left your hands and is now in Apple's so you make an exchange of cash for what is essentially Apple credit on the day of purchase, although they still refer to them as dollars and that's where the problem occurs.

As far as I know you cannot get these cards or portions of the value of the card refunded for cash unless Im mistaken.

The odd part is that Apple can still make adjustments to the relative dollar value of this card compared to the US$ after you have purchase by way of increasing or decreasing the local cost of apps, whilst its true that it can go both ways this just seems bizarre they are able to do this.

What we should really be buying is genuine apple credits that have the same value the world over and cannot be up/down valued depending on currency exchange rates.

Do any other gift cards work under a similar system or is apple unique here? How about Google Play cards?

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  • indium on 03/09/2014 - 16:09
    +1

    That applies to anything when using a gift card, you could but a dick smith gift card the exact price of an item you want only to find they changed the price the following week.

    It's also pretty standard for digital content to have a different price for US and Australia. Steam do this for example

  • scrimshaw on 03/09/2014 - 16:26
    +1

    The odd part is that Apple can still make adjustments to the relative dollar value of this card

    Isn't that the nature of all gift cards, as well as money in general?

    If you were given a $50 gift card for a store and the store raises/lowers their prices of every product they have due to inflation etc. it affects the purchasing power of the $50 credit you were given.

    For digital stores that operate globally their prices will fluctuate because of US-AU currency exchange rates and this in turn affects the purchasing power of a given gift card.

    • Gravy on 05/09/2014 - 14:37

      I can see what you are saying but this isnt just about price rises and falls in relation to inflation, its across the board price changes (up or down) according to currency fluctuations. Im not saying its always a bad thing for the consumer though, it does work both ways.

      I guess what you guys are saying about other global store gift cards is true, but maybe what Im really asking is would we prefer to be purchasing none volatile company credits rather than a dollar value in our local currency? Given that after we hand over our cash the cards cannot be refunded so why should they be treated as cash in terms of currency fluctuations. If they gave me the option to cash out the remaining funds it would be a different situation, but companies don't do this in general.

  • ESEMCE on 03/09/2014 - 16:40
    +1

    Yet another reason why gift cards suck!

    • eatwell365 on 03/09/2014 - 17:48
      +1

      why buy gift card when there is prepaid credit card?

      • scrimshaw on 03/09/2014 - 18:58
        +1

        You still have to pay the $5.95 fee to activate the gift card.

        • RockyRaccoon on 04/09/2014 - 14:40
          -1

          You still have to pay the $5.95 fee to activate the gift card

          I think you are confusing gift cards with prepaid Credit cards.

          Different animal

      • ilostnemo on 03/09/2014 - 20:20

        When are these prepaid credit cards 50% off?

  • Stopback on 03/09/2014 - 17:21
    +1

    Another idea, when apple gift cards go on sale for %50 what is stopping developers buying them and transfering the cash to their own in game apps?

    • jace88 on 03/09/2014 - 17:51

      I'd guess it's very rare for them to do the 50% off (in isolation). Most of the sales are in the 20-25% range, which still won't break even because doesn't Apple take a 30% cut? You'd also have to create a lot of accounts too since each Apple ID can only buy an app once?

      • msmhw on 06/09/2014 - 12:12

        the developer can add in-app purchase which can be bought many times

  • jace88 on 03/09/2014 - 17:54

    @Gravy , I see where you're coming from but look at it this way, it's like any other gift card or cash. You're giving up liquidity for convenience. In doing so, you're taking on risk (who's to say Apple Store won't either hyper inflate all prices, or just shut down?). The discounts are a great way to encourage people to essentially put their money in Apple upfront even before they've used it.

    There's also potential for some accounting recognition of the income upfront depending on interpretation of standards and historical usage patterns.

  • RockyRaccoon on 04/09/2014 - 14:36

    Sorry I dont understand what the OP is saying.

    You buy a $100 giftcard, to buy programs movie etc (Of course the only time you would buy a giftcard is when its 20% or so off)

    Today those movies etc would cost you $30, so you have $70 left over.

    Are you saying that someone at Apple or any other vendor can say

    Hey the GRAVYtrain has arrived" they still have $70 left to spend, lets get on the gravytrain and up the price of all programs/movies by 20% as we have their money and they are stuck!!

    Really these guys make more money from Joe Hockey by praying to the Irish Tax gods, they they will ever get from the GRAVYtrain.

    I think you are seeing reds under the bed…

    • Gravy on 05/09/2014 - 14:22

      What I'm saying is that you buy an Apple gift card at a certain point in time and hand over your money to Apple based on the exchange rate of the day, the money has left your hands and is then in Apple's accounts. Now consider a couple of months down the track and the Aussie dollar drops dramatically and Apple decides it wants to change all its Aussie pricing to accommodate this fall, thats fair enough BUT you already bought the apple credits way back when the aussie dollar was floating much higher.

      As I stated in the opening post, it does have potential to move both ways so I'm not saying we will always get shafted, just that perhaps Apple could handle credits a different way so this volatility doesn't happen within its credit system.

      (ignoring gift card specials for sake of argument)

      • RockyRaccoon on 05/09/2014 - 15:49

        Just like one day you buy something and the next day the price changes. If you look at the way things have worked in the past, they have only adjusted the rate AFTER a fairly long period of stability.

        Plus if you are concerned dont buy a gift card of a value more than you will use over say a 3 month time frame.

        Its the same as any gift card. I buy some Myer cards because they are 10% off, so that at Christmas I can buy goods with those discounted cards, and the price of what I was going to buy goes, if the Aussie dollar drops and the supplier increases the price.

        You say to ignore the specials for the sake of the argument. Then why are you buying the giftcard?

        The only way you can hold a significant value to be concerned about is because you got a great discount on the card(s).

        Buying prepaid vouchers only makes sense if you get a discount, so you are ahead. Otherwise just charge to a credit card when you are ready.

        Used properly you can save, used incorrectly it will cost you, just like a credit card, just different ways of use.

        And finally rather than complain, why not make a suggestion how this could be handled. The only real way would be to convert the balance to $US or fix your purchase price to the old pricing structure, but then as you said its going to be nailed if the $ shifts the other way and you have to pay more. Or what about products that werent priced previously, like new software packages?

        Now lets take refunds? How do they know what you paid for the card? You get a $50 card for $40, spend $10 and you still have $40 credit. Do they know you got a discount? Do they refund you the $40, or do you have to prove what you paid first, before they will give you the money back.?

        And then if the value goes the other way people scream saying Apple took money away from them. Like all these things it always cuts both ways

        • Gravy on 11/09/2014 - 13:58

          Its a difficult situation and I wasn't complaining as such, more making an observation. In my opening post I did mention that it can go both ways (for and against you). I also made a suggestion as to how it could be handled: "What we should really be buying is genuine apple credits that have the same value the world over and cannot be up/down valued depending on currency exchange rates."

          Ultimately I am ahead buying gift cards as I never pay full price, but I wanted to leave this aspect out of it as its not about my buying habits, but how regular joe consumer normally buys cards (likely at full price).

  • jace88 on 05/09/2014 - 11:52

    There's also the issue of if they did that once, it won't be long before everyone knows and noone will be willing to buy gift cards in the future from them because of that risk. So yes they might make a short term gain, but long term will be far more damaging.

    • Gravy on 05/09/2014 - 14:23

      They have made adjustments several times in the past to Aussie pricing so its already happened. Not hyper inflated though if that's what you mean?

      • jace88 on 05/09/2014 - 17:24

        But they did it to everyone, not just those with gift cards. i.e. your purchasing power relative to having liquid cash hasn't actually changed assuming you still want something from the Apple stores. You also want to keep in mind Apple themselves don't set the prices as far as I know- it's set by the seller, and Apple just takes their cut.

        I take your point that you're losing liquidity, but if anything, I feel there is at least some stability here in the Apple stores with what you can use your Apple credit for.

        • Gravy on 11/09/2014 - 14:07

          Yeah but those who purchased gift cards did so when the exchange rate was at a certain value, which is different to what current cash buyers value may be.

          Prices are set by sellers, but price points are set by Apple. For instance a seller is not currently able to set their price to AUD$0.99c.

        • jace88 on 15/09/2014 - 09:56

          @Gravy: I guess I see you point but at the end of the day, if you buy an iTunes card (or any gift card for that matter), you're swapping your cash for store credit (whether it's at a discount, par or premium- it never made sense to me why people paid premiums for the physical card!). There's no implied or explicit guarantee that you will be able to change it for a set number of goods or services here.

          Like everything else in the real world, the costs of things always change of things based on lots of factors… it's just that not every retailer updates their pricing in a timely manner (again for various reasons whether it's menu cost or to maintain a positive customer experience).

  • [Deactivated] on 25/12/2014 - 09:26

    I get what OP is saying and it applies to any store where prices are heavily based on an foreign exchange rate.

    When Apple (or whichever foreign store with an Australian presence) adjust their prices across the board DUE TO EXCHANGE RATE this is because the value of the currency is different when the store receives payment and they need to adjust accordingly. i.e. $1 AUD is worth $0.80 USD now.

    However when an Apple gift card was purchased a few months ago, that amount of money was already transferred to Apple and thus what OP is saying is that effectively it has already has it's currency exchanged from AUD to USD at the currency conversion rate at the time i.e. $1 AUD was transferred to $1 USD.

    While I can see OP's point, I think that what he is suggesting make it more confusing to customers, Apple are offering is $20 AUD currency = $20 AUD Giftcard and are honouring that amount based on AUD (even if the actual money paid itself is already in United States, Ireland, Cambodia or wherever). Whatever Apple choose to do with the cash itself once paid is at their private discretion and are free to invest or game the markets as they see fit without consideration to the gift card.

    If OP doesn't want Apple (or who over) to do this then they should not use gift cards or set up an account on the US iTunes store (which is not too difficult), and keep a balance of US Dollars.

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