October 29, 2007

Apple Gift Cards Not Allowed for iPhone Purchases

No Gift Card Purchases for iPhone
Over the weekend, Apple introduced a new policy of no longer accepting cash for iPhone purchases and limiting sales of iPhones to two per person. The main reason provided by Apple was to prevent people from reselling iPhones and unlocking the phone so it can be used on other networks besides AT&T. Furthermore, news and blog sites are also reporting that Apple gift cards cannot be used to purchase iPhones, because Apple considers Apple gift cards to be in the same category as cash.

In order to enforce their policy of two iPhone per person limit, Apple needs a way to track who has purchased what. An efficient way to do this is through credit or debit card payments as that is associated with personal information. Unfortunately, cash payment is not traceable and was banned as a form of payment. Furthermore, Apple gift cards are untraceable and was also prohibited as a form of payment. It is understandable that Apple wants to protect its exclusivity relationship with AT&T and stem the flow of unlocked iPhones onto other mobile phone networks. However, this new policy may have over stepped the common business sense boundary and could result in hurting legitimate buyers. For example, people who have scrapped together money and assortments of Apple gift cards from family and friends will now need to find another way to buy their iPhones.

However, Wired.com’s blog is reporting that there is some flexibility on an individual store basis with accepting gift cards as part of payment for iPhones. It is reported that one Apple store in San Francisco will accept gift card or combination of gift cards that is less than $399 in total value as payment along with a credit card payment that makes up the difference. At least there is some reprieve for those planning to use Apple gift cards to help pay for an iPhone.

Another possible way to circumvent the gift card restriction and/or two iPhone per person limit is to use prepaid bank gift cards, such as Visa debit gift card or American Express gift card. These type of gift cards qualify as a form of credit or debit payment. However, we have not heard any confirmation that this is possible or whether Apple’s payment processing system is sophisticated enough to differentiate a bank gift card from a credit card. Furthermore, Natalie Kerris, an Apple representative, was quoted on Wired.com’s blog as saying “that policy excludes gift cards as well”. It did not elaborate on whether gift cards applies to non-Apple gift cards.

Apple imposes new limits on iPhone sales [Yahoo! News]
Apple not just refusing cash, also refusing Apple Gift Cards for iPhones [Engagdet.com]
Some Apple Stores Still Accepting Gift Cards for iPhones [Wired.com Epicenter Blog]

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