What is a gift card?

A gift card, also known as a gift certificate, gift voucher, stored value card, or prepaid credit, is a digital or physical instrument that carries a prepaid balance a customer can spend on future purchases. Unlike coupons or promo codes, gift cards represent monetary value rather than a discount, and they function as a lightweight, brand-owned wallet.

Modern digital gift cards are more than simple prepaid balances. They act as a:

• Stored value ledger.
• Customer-friendly balance wallet.
• Refund mechanism.
• Re-engagement tool.
• Revenue-accelerating product.

Gift cards can be redeemed for eligible items, split across multiple orders, combined with other payment methods, or configured with advanced conditions (e.g., minimum order value, category restrictions, or exclusion rules such as “cannot purchase another gift card”).

Types of gift cards

Gift cards are typically offered in three formats:

1. Digital gift cards

Delivered via email, mobile wallet, or app. Instant to issue, simple to track, and ideal for omnichannel commerce.

2. Physical (paper or plastic) gift cards

Distributed in-store or via third parties, often paired with a barcode/QR code for digital redemption.

3. Hybrid cards

Physical cards that also exist digitally, allowing redemption via app, website, or POS. Voucherify supports all three formats with unified balance tracking.

How gift cards work?

At their core, gift cards operate on a balance ledger. Each redemption deducts value from the card until the available balance reaches zero. A modern gift card system must support:

• Real-time balance updates.
• Multi-use redemption (partial spending).
• One-time redemption option.
• POS + online interoperability.
• Expiration rules.
• Event-triggered issuance.
• Customer assignment & identity tracking.
• Fraud protections for balance checks.

Common limitations and rules for gift cards

Gift cards often come with built-in restrictions, including:

• Minimum order value for redemption,
• Excluded product categories (e.g., “cannot be used to purchase other gift cards”).
• Channel limitations (online only, app only, region-specific).
• Expiry dates or inactivity rules.
• Per-customer redemption limits.

Why brands use gift cards?

Gift cards are one of the most profitable incentive tools in commerce because they combine cash flow advantages, behavioral economics, and operational efficiency.

• ‍Immediate revenue recognition: Gift cards generate cash upfront and create future purchasing intent without requiring immediate fulfillment.‍
• Natural AOV lift (Endowment Effect): Recipients treat gifted value differently than earned value. They are more likely to buy premium items, purchase full-price products, and exceed the card’s value (“top-up purchases”). This leads to consistently higher cart sizes.‍
• Lower return rates: Gift cards reduce the guesswork of gift buying. When recipients choose their own items, returns drop dramatically, saving brands from costly reverse logistics.‍
• Better margins than discounting: Where discounts reduce revenue, gift cards shift spend timing and often increase it. They are a preferred alternative to rebating or sitewide promo codes.‍
• Powerful refund mechanism: Using gift cards for returns keeps value inside the brand ecosystem. This is a major revenue retention tactic, especially for apparel, beauty, and DTC brands.‍
• Fraud reduction through trackable identity: Digital gift cards allow per-customer assignment, controlled redemption, and device-level tracking. This makes abuse (e.g., brute-force guessing or multi-account farming) significantly harder.‍
• Flexible use cases across the lifecycle: Gift cards support acquisition, retention, win-back, recovery, and customer support scenarios. They are one of the most versatile stored-value instruments.

Gift cards in Voucherify

With Voucherify, you can:

• Create digital or physical cards.
• Issue them through API, dashboard, workflows, or integrations.
• Control redemption with granular validation rules.
• Track balances in real time.
• Assign cards to customer profiles.
• Combine with loyalty wallets or promo campaigns.
• Monitor usage across channels (web, app, POS).

Voucherify’s gift card engine is built to support high-volume commerce, complex program rules, and enterprise-grade fraud controls.