Gift Card Definition

A gift card (also known as a gift certificate, gift voucher, or gift token) is a prepaid debit card that contains a specific amount of money or credits available for use for a variety of purchases. Gift cards can carry additional limits, for example, they may have to be redeemed once or could be split between orders. Another limitation can be the minimum order value they can be used on or products that cannot be paid for with a gift card (often gift cards are excluded, meaning customers cannot pay with one gift card for another gift card).

You can offer digital gift cards, paper gift cards, or a mix of both (paper gift cards that can be used online as well and are available on the mobile app). Gift cards can be sold as standalone products or offered for free as a part of a campaign. 

Learn how to build gift card campaigns in Voucherify.

What are the benefits of using gift cards?

• Increased cash flow as cards are purchased in advance. They also work great as a refunds.
• Increase in the number of impulse purchases thanks to the endowment effect and loss aversion behavior.  
• Higher margin sales as gift card receivers say are more likely to buy full-priced or more expensive items.
• Increased AOV, especially if you put a minimum order value as a condition for using the gift card.
• Decrease in returns. According to the National Retail Federation, 8.8% of holiday gifts will be returned. Because recipients choose their own gifts, gift cards may lower the high costs associated with handling returns.
• Reduced fraud as you can track who redeems them and allow redemptions to be done only by the card holder.

Learn more about running highly personalized gift card campaigns with the Ultimate Gift Cards Guide.