Gift cards are a preloaded form of digital or physical currency. They have become a mainstay in the retail industry as an alternative to traditional cash or credit card transactions. The global gift card market was valued at over $950 billion in 2024. Gift cards drive immediate revenue and engage customers in a way that often leads to repeat business.

Below is a short guide to accepting gift cards for businesses. We’ll cover different types of gift cards and the benefits of accepting gift card payments, as well as the best practices businesses should employ when building a gift card program.

What’s in this article?

• How to accept gift cards as a business
  
• Types of gift cards
  
• Business benefits of accepting gift cards
  
• Gift card management best practices
  
• How to choose gift card management software
  
• How Stripe Payments can help
  

How to accept gift cards as a business

Here's how to build a gift card program that runs smoothly from day one.

• Choose the right gift card format
  Decide between physical cards, digital cards, or both. Physical cards work well for in-store retail, while digital cards suit ecommerce and appeal to more tech-savvy shoppers.

• Estimate the costs of a gift card program
  Startup costs typically include card production, service fees, and software subscriptions, which can range from a few hundred to several thousand dollars depending on scale.

• Select how you'll sell and redeem gift cards
  You can sell gift cards in-store, on your website, or through third-party marketplaces. If your point-of-sale (POS) system or ecommerce platform doesn’t support redemption at checkout, gift card management software is an option.

• Set up balance tracking and reporting
  Your gift card software or POS system should track outstanding balances, redemption rates, and unredeemed liability. Regularly reviewing these reports helps you forecast cash flow.

• Confirm legal and compliance requirements
  In the US, gift cards must be compliant with the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. Some states have additional rules around escheatment, the process of turning over unclaimed balances to the state, so consult a legal professional if you have any concerns.

• Design your gift cards
  For physical cards, ensure your design reflects your brand clearly. For digital cards, design a clean, mobile-friendly template that includes your logo, redemption instructions, and any relevant terms.

• Launch and market your gift card program
  Promote your gift cards through email, social media, and in-store signage, especially around high-gifting seasons like holidays and back-to-school.

• Integrate gift cards with your loyalty or rewards program
  Linking gift cards to your loyalty program encourages repeat shopping visits and increases the lifetime value of each customer. Some platforms allow customers to earn points when purchasing or redeeming gift cards.

• Define refund and return policies
  Decide upfront whether you'll allow cash refunds for gift card balances, exchanges, or store credit only, and make sure these policies are clearly communicated at the point of sale.

• Plan for setup time and ongoing management
  Many small businesses can launch a basic gift card program within a few days to a few weeks, though more complex integrations may take longer. Ongoing management is relatively low-lift once the system is running, but you should designate someone to monitor balances, handle customer inquiries, and keep compliance documentation up to date.

Types of gift cards

There are several types of gift cards and each has a specific purpose and usage pattern. Here’s a list of the different types of gift cards:

• Closed-loop gift cards
  Closed-loop gift certificates can be used with a single retailer or a specific group of related businesses. They cannot be redeemed elsewhere. These prepaid vouchers essentially act as store credit. While this limits the customer’s choice, it guarantees that the gift voucher’s funds will be spent with the issuing business, retaining revenue and encouraging customer loyalty.

• Open-loop gift cards
  Customers can use open-loop gift cards at a variety of businesses. They are often co-branded stored-value cards offered through payment networks such as Visa or Mastercard, and function similar to a debit card. While these preloaded cards provide customers with flexibility, they charge service fees and usually don’t build customer loyalty for a particular retailer.

• E-gift cards
  E-gift cards are digital gift cards sent via email or short message service (SMS). They have gained traction for their convenience and are highly popular with tech-savvy customers. Offering e-gift cards, digital credit, promo codes, and electronic vouchers can be a smart choice for businesses, because these types of gift cards don’t have the same production and distribution costs as physical gift cards.

• Charitable gift cards
  Charitable gift vouchers allow the cardholder to use the card as spending credit to make a donation to a charity of their choice. Though not common in mainstream retail, these types of gift cards can be a good choice for certain customer demographics that are inclined to give money to favored causes and charities.

• Experience-based gift cards
  Customers can redeem service vouchers for experiences, such as a session pass for a spa day or an adventure activity, rather than goods. They serve specialized markets and usually have time restrictions.

• Reloadable gift cards
  Customers can add funds to reloadable gift cards, similar to prepaid debit cards. This feature tends to boost customer loyalty and facilitate repeat purchases. For example, a Starbucks gift card can also function as a rewards card, which encourages customers to refill the cards and earn points on their purchases.

Business benefits of accepting gift cards

When redeeming gift cards, 61% of shoppers spend more than the card’s value—an average of $31.75 more—making gift cards a promising driver of higher transaction totals. Adopting a gift card program can increase immediate revenue, deepen customer relationships, and help meet other business objectives. Here’s a closer look at some of the advantages of accepting gift cards:

• Immediate increase in revenue
  Gift card sales generate up-front revenue for a business. Unlike other revenue streams that depend on future actions or outcomes, such as installment payments or conditional contracts, gift cards supply an immediate influx of cash. This is particularly useful for businesses with uneven or cyclical revenue patterns.

• Additional customer spending
  The prospect of spending “free money” can encourage gift card holders to exceed the original value of the card, and spend more on higher-priced items or add-ons. This increase in individual transaction value can substantially impact overall revenue figures.

• Increased customer acquisition and loyalty
  Gift cards often introduce new customers to a business. When a current customer gives a gift card to someone else, they are extending an invitation to experience the brand. The gift card recipient is more likely to return and become a loyal customer.

• Effective inventory management
  Businesses can use gift cards to guide customer spending. For example, they might tie a gift card promotion to specific products that are overstocked or seasonally appropriate, which can help balance inventory levels and reduce holding costs.

• Lower operational costs
  Digital gift cards eliminate the costs of printing, storing, and shipping, which helps businesses maintain a healthy bottom line. A percentage of gift cards issued will also go unused, which improves the viability of a gift card program.

• Customer insights
  The transaction data collected from gift card redemptions can show businesses which products customers favor, when the most redemptions occur, and how first-time customers use the cards versus repeat customers. Businesses can analyze this data to fine-tune inventory and pricing strategies, marketing campaigns, and customer engagement initiatives.

• Sustained brand awareness
  Each time a customer interacts with a gift card—either by using it for a purchase, or seeing the gift card in their wallet or email inbox—they are engaging with the brand.

• Minimized payment risk
  Gift cards are prepayments for future goods or services, eliminating certain financial uncertainties. Unlike checks or credit payments that could default or incur chargebacks, gift cards represent funds that have already been transferred.

• Compliance with established regulations
  Many businesses view regulatory compliance as a hurdle, but the regulations affecting gift cards, such as the CARD Act in the US, are generally well-defined and manageable. This simplifies the legal aspects of running a gift card program.

Gift card management best practices

Managing a gift card program demands meticulous planning, ongoing monitoring, and strategy adjustments based on real-world performance and changing market conditions. Following these best practices will position your gift card program for success:

• Communicate transparently
  Businesses should fully disclose the terms and conditions of using a gift card, such as expiration dates and service fees. Transparent communication adheres to regulatory guidelines and builds trust with customers. An FAQ section dedicated to gift card policies on the business website is an easily accessible resource for customers.

• Track and analyze performance
  Implement a well-designed tracking system to oversee gift card sales and redemptions. It should capture granular data, such as which items are frequently bought with gift cards, patterns in seasonal spending, and whether gift cards are primarily being used by new or current customers. This real-time information provides invaluable business insights for adapting strategies effectively—and it can help identify and prevent fraud.

• Offer multichannel availability
  Businesses can create multiple revenue streams by offering gift cards both in store and online. The convenience of online purchasing and digital delivery appeals to a segment of customers who prefer to shop remotely, while physical cards sold in store target more traditional buyers. Providing options for both channels can maximize reach and profitability.

• Audit periodically and take strong security measures
  Regularly auditing the gift card program can reveal strengths and weaknesses while also offering a way to monitor for unauthorized transactions. Audits should focus on accounting practices, data security measures, and other topics to ensure that the program remains protected and financially sound. Since gift cards are equivalent to cash, securing them with multifactor authentication for digital gift cards or tamper-evident packaging for physical cards can reduce the risk of fraud in addition to the audits.

• Engage with customers
  Engaging with customers after they’ve redeemed a gift card can generate additional sales. Post-redemption engagement could include targeted email campaigns, special discounts on future purchases, or invitations to exclusive events. Such efforts can prolong the customer life cycle and boost revenue.

• Create strategic partnerships with other businesses
  Collaborating with complementary businesses can extend the utility and attractiveness of a gift card program. A bookstore could partner with a local coffee shop, for example, and allow for gift cards to be used at both venues. Such partnerships create mutual benefits by driving cross-traffic and improving the customer experience.

• Brand gift cards consistently
  A gift card is a brand ambassador and its design should reflect the brand’s identity. This includes the look and feel of physical cards and the user interface for digital cards. Cohesive branding offers a unified customer experience and helps customers remember the brand.

• Make sure gift cards are compliant
  Although compliance with legal requirements for gift cards is less cumbersome than it is in other business operations, it still requires vigilant management. Businesses need to stay up-to-date with changing laws and update terms and conditions accordingly to maintain compliance.

How to choose gift card management software

Gift card management software helps businesses issue, track, and redeem gift cards while managing balances and helping to prevent fraud. Medium and large businesses or those with high gift card volume should use gift card management software, while smaller businesses can often make do with basic POS features instead. When selecting a gift card management software, consider these factors:

• Define the features your gift card software needs
  First consider what you want the software to do. Some businesses might require multichannel support for online and physical stores, while others may need advanced tracking and analytics capabilities. Whether you need to issue digital and physical cards, conduct transactional audits, or run promotional campaigns, a gift card management platform should cater to your business needs.

• Make sure the customer experience is high quality
  An easy-to-use software solution will shorten the learning curve and improve operational accuracy. Test the gift card management platform in advance to get feedback on the user interface, navigation structure, and overall usability. Superior customer experience will increase the success of your gift card program.

• Consider which analytics are important to measure
  High-quality software should include extensive reporting capabilities. This should include basic transaction history as well as advanced analytics, such as usage patterns and popular buying times. This data can inform business decisions, from inventory management to targeted marketing campaigns.

• Choose secure software
  Gift card management software must have strong security measures in place. These should include encryption for data at rest and in transit, as well as strong authentication mechanisms. Regular software updates addressing security vulnerabilities are also important to protect the system against evolving threats.

• Assess options for scaling
  Choose a gift card management platform that can grow along with your business. The system should be able to handle increased transaction volumes, conduct more extensive data analysis, and add more features as required. Changing systems in the future can be costly and disruptive to your business.

• Evaluate long-term costs and ROI
  Assess the long-term value instead of focusing solely on initial costs. Consider purchase price and subscription fees, but also look at costs related to training, maintenance, and any additional features that might be needed in the future.

• Seek out compliant software
  Software should comply with relevant laws and industry standards concerning gift cards. This includes regulations for data protection, consumer rights, and financial reporting. Noncompliance can result in legal complications and reputational damage.

• Research the provider’s reputation
  A reputable provider often indicates a reliable product. Reviews, customer testimonials, and years in business can help businesses assess a vendor’s credibility. Excellent customer support, including troubleshooting and regular updates, is important for ongoing program operations.

• Integrate your systems
  Examine how well the software integrates with your existing systems, such as point-of-sale systems, ecommerce platforms, and CRM software. Smooth integration can save businesses significant time and effort. Learn more about how to create gift cards and vouchers that are compatible with your Stripe payment solutions.

• Customize the software
  Look for software that allows you to customize it for your specific needs—from branding elements such as logos and color schemes on digital gift cards to customized reporting features. This customization will add value to your program and improve the customer experience.

Carefully select gift card management software by considering your specific business requirements and future growth. Prioritize functionality, security, and scalability to create an effective, sustainable gift card program.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.