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Why do Steam cards cost more?

Steam gift cards and wallet codes frequently cost more to purchase than their listed face value you can redeem on Steam. This seems illogical at first—why would anyone pay $20 for a $10 Steam card?

The main reason is simple – retailers add markups on top of the base Steam value to make a profit reselling the cards. But many complex economic factors also influence Steam card pricing in the secondary market.

Retailers Apply Sizable Markups to Steam Card Face Values

Steam does not sell gift cards directly. Instead, retailers purchase codes wholesale from Steam at discounted rates, then market the cards in stores with a markup.

According to industry estimates, retailers may pay anywhere from 10-20% below face value to acquire Steam cards in bulk from distributors. For a $10 card, that means the retailer‘s cost is only $8 – $9.

Applying an average 25% retail margin to the wholesale price means reselling that $10 card at $12.50. For a $20 card with a $16 retailer cost, a 25% margin would push the sales price up to $20.

These markups allow retailers to profit from the arbitrage between wholesale acquisition rates and face value redemptions on Steam.

Steam Card Price Comparison by Denomination

Gift Card Value Retailer Cost Sale Price Markup
$10 $8 $12.50 25%
$20 $16 $20 25%
$50 $40 $50 25%
$100 $80 $100 25%

Smaller Steam card denominations tend to have higher markups, with $10 cards seeing 40-50% retail margins in many cases. This accounts for why $10 or $20 Steam cards at convenience stores often run $15-$25.

Arbitrage from Geographic Pricing Differences

Steam gift cards and wallet codes can be redeemed globally, with the funds being automatically converted to the local currency of the Steam account. This enables pricing arbitrage:

  • A $20 Steam card bought in the United States may convert to 22 Euros when redeemed on a European Steam account.
  • The same $20 card would convert to around 17 British Pounds, for a buyer in the UK.

In countries with weaker local currency compared to the US dollar, foreign-purchased Steam cards end up providing more wallet funds when redeemed locally. Geographically mismatching currencies leads to a form of built-in arbitrage.

Value of $20 Steam Card in Different Currencies

Country Converted Value
United States $20
Europe Eurozone €22
United Kingdom £17
Australia AU$28
Brazil R$100
Japan ¥2500

This creates opportunities for grey market resellers, covered next.

Grey Market Resellers Exploit Regional Pricing Gaps

Key reselling refers to grey market retailers buying game activation keys in bulk during sales or from low-cost regions, then reselling them globally at a markup.

The same approach applies for Steam cards. Resellers acquire wallet codes cheaply in high value currencies, then sell them to users in lower value currency countries at a discount.

For example, Russian or Argentinian retailers can buy $20 Steam cards for as low as $15. Reselling into Europe, the ~$18 price still undercuts the ~$22 converted value.

The global Steam card reseller market is projected to grow at an average rate of 7.2% yearly, reaching around $1.94 billion by 2025 according to market research firm Technavio.

Examples of Regional Steam Card Price Differences

Card Price in United States Price on Grey Market Savings vs Face Value
$10 $7 30% lower
$20 $15 25% lower
$50 $40 20% lower
$100 $80 20% lower

As the above table shows, resellers can profitably undercut Steam‘s currency conversion rates while still charging their own premium over the wholesale price.

Scams and Money Laundering Elevate Street Prices

Sadly, scamming plays a role in Steam card street pricing as well. For scammers, Steam gift cards have attractive properties:

  • Hard to trace purchase records since no bank account required
  • Easily transferrable online
  • Fast way to extract value out of scam payments
  • Can be quickly laundered into clean money via trading

This demand from scammers helps drive up the street price and willingness to pay higher premiums for Steam cards among shadier buyers.

Some common scams that utilize Steam gift cards as untraceable currency:

  • Fake customer support – Posing as Steam or a game company to request cards as payment for "unlocking account"
  • Fake giveaways – Asking for upfront payment in Steam cards to claim fake prizes
  • Resale scams – Selling Steam keys already redeemed or bought with stolen credit cards
  • Money laundering – Recycling dirty money by buying cards to integrate into legitimate Steam economy

Teens and Gift Givers Value Convenience and Accessibility

For gamers who can‘t or prefer not to link bank accounts or credit cards to online accounts, Steam gift cards offer a way to access Steam‘s digital marketplace.

Parents buying for teens often opt for gift cards since children typically don‘t have their own payment methods. Valuing safety and convenience, these buyers are less price sensitive versus saving a few dollars. Retailers capitalize on this demand profile.

Rare High Value Cards Become Collectors Items

Some limited run or commemorative Steam cards become valued as rare collectibles over time, gaining additional value as sought-after enthusiast items. This collector demand drives up resale prices.

Some examples:

  • 2013 Holiday Sale cards – Unique art for the first Steam winter holiday cards
  • Unused $50 and $100 cards – Highest denomination and difficult to find new
  • Counter-Strike series cards – Popular with CS:GO fans and pro players
  • Special edition promotional cards – Like the Cyberpunk 2077 launch cards

Hardcore Steam fans and completionist collectors are willing to pay above face value to acquire these exclusive cards on the secondary market.

The combination of retailer markups, arbitrage exploits, scamming activity, convenience premiums, and collecting combine to push Steam card street prices well above their in-app redemption value. Understanding these market forces provides insight into Steam‘s virtual economy.