Ecommerce ops / Gifting
Turning Gift Cards and Gifting Into a Revenue Channel
// a gift card is a sale now and a new customer later
By Fracto Solutions
October 29, 2026
The short answer
Gift cards are an underused ecommerce asset: they bring in cash upfront, introduce new customers (the recipient), and smooth seasonal revenue. On Shopify they’re a built-in feature on paid plans. Sell them prominently (especially around holidays), make them easy to send, and pair them with gifting features like gift messages and scheduled delivery to capture gift-buyers you’d otherwise lose.
$29bn
5 years
43%
Why are gift cards a strategic asset, not an afterthought?
Because they pull revenue forward, put your brand in front of someone who has never bought from you, and carry a demand peak you can plan for. They also create a liability and a compliance surface, and the honest version of the case includes both.
Start with the demand, because it is the part with real numbers behind it. NRF and Prosper put expected US holiday gift-card spending at about $29bn, with 43% of shoppers planning to buy at least one. That is a planned, repeating, seasonal purchase occasion, and a store that treats gift cards as a footer link is opting out of it.
The second argument is acquisition, and here we have to be careful. The recipient may well be new to your store, and that is a genuine reason to care. But nobody publishes the share of redeemers who are first-time customers, so we will not assert it as a fact. What is measured points slightly the other way: BHN found that US consumers buying gift cards for their own use rose from 31% in 2025 to 56% in 2026, on a sample of 2,138 adults. A growing share of gift-card buyers are not gifting at all.
The third argument is cash timing, and it is real but it is not free money. See the cash-flow section below, because the accounting treatment is the part most gift-card advice omits entirely.
How do gift cards work on Shopify?
They are a native feature on every Shopify plan, with no third-party app needed to start. Shopify stores the balance and redeems it at checkout. Sending the card to the recipient rather than the buyer takes one theme setting that is easy to miss.
First, a correction to an earlier version of this page, which said gift cards were native on paid plans. That has not been true since April 5, 2020, when Shopify announced it was “enabling our gift cards feature on all Shopify plans indefinitely.” If you have been told you need to upgrade to sell gift cards, you do not.
The mechanic worth knowing is the delivery one. There is no setting called “digital delivery”. By default the gift-card notification goes to the purchasing customer, which is correct for self-purchase and wrong for gifting. To let the buyer send the card straight to the recipient, you enable the recipient-information form in the theme editor under the Buy buttons block, which adds recipient email, recipient name, a message and a “Send on” date. It is native to Online Store 2.0 themes from version 9.0.0, including Dawn and Horizon; on a vintage theme it needs developer work. Physical gift cards are a separate thing: they are Shopify POS hardware cards, available in supported countries only, which is why most online-only stores sell digital.
How do I set up and sell gift cards well?
Create a small set of denomination variants plus a custom amount, turn on the recipient form, and then put the card somewhere a gift-buyer will actually find it. The setup is an afternoon. The merchandising is the part stores skip.
Denominations are product variants on the gift-card product, so pick three or four that cover your typical gift budgets and add a custom-amount option if your theme supports it. Resist the urge to offer ten; every extra option is another decision for someone who is already buying under time pressure.
On findability, we have in the past asserted that a link three clicks deep gets ignored. We should not have: the three-click rule is folklore and has been contradicted repeatedly in usability research. What we can say is narrower and still useful. Gift cards compete for attention during a short, intense window, so they belong in the main navigation and on the homepage through November and December, in search results, and as a cross-sell on product pages for items that miss the shipping cutoff. Treat the placement as a seasonal campaign rather than a permanent menu item, and measure it.
Before you promote them, check the legal position for the markets you sell into. That is the next section, and it is specific enough to act on.
What do the expiry and fee rules actually say?
They differ sharply by market, and “regulated in many places” is not enough to act on. The US has a precise federal floor and stricter state law, the EU has no general expiry rule at all, and the UK has no statutory minimum validity. Here is the short version for each.
United States, federal. Gift-card funds cannot expire earlier than the later of five years after issuance or five years after the last load. Dormancy, inactivity and service fees are barred unless all three conditions hold: the card has had no activity for the full one-year period ending on the fee date; the fee amount and frequency are disclosed clearly and conspicuously on the card itself; and no more than one such fee is charged in any calendar month. Loyalty, award and promotional cards, paper-only certificates, reloadable cards not marketed as gift cards, and venue-admission cards are exempt. That is the Credit CARD Act of 2009, Title IV, at 15 U.S.C. 1693l-1 and Regulation E, 12 CFR 1005.20, in force for cards sold on or after August 22, 2010.
United States, state. Often stricter, and it moves. California bars expiry and service fees on most gift certificates outright, and since April 1, 2026 requires cash redemption of any balance under $15, up from $10, under SB 22. The amended definition expressly covers electronic gift cards. If you sell into California and your small-balance policy still says $10, it is out of date.
EU and UK. There is no general EU expiry rule; a short or buried expiry is attacked as an unfair contract term under Directive 93/13/EEC, Article 3(1), and unfair terms are “not binding on the consumer” under Article 6(1). The UK position is similar: no statutory minimum validity, with an unfair expiry unenforceable under section 62 of the Consumer Rights Act 2015, and section 64 sheltering a term from the fairness test only where it is transparent and prominent. If you are handling VAT, note that treatment depends on voucher type under Directive (EU) 2016/1065: single-purpose vouchers are taxed on transfer, multi-purpose vouchers on redemption.
None of this is legal advice, and Shopify’s own documentation says the same thing in fewer words: gift cards do not expire by default “because it’s illegal in some countries for gift cards to expire,” and you should verify the rules for your country.
How do gift cards help cash flow, and what does that cost?
You collect the money before you ship anything, which is genuinely useful. But a gift-card sale is a liability on your books, not revenue, and in some US states part of an unredeemed balance belongs to the state rather than to you. Both halves belong in the plan.
Under ASC 606 a gift-card sale is a contract liability, recognized as revenue when the card is redeemed. Unredeemed value is handled as breakage: if you expect to be entitled to it, you recognize it in proportion to the pattern of redemptions, and if you do not, only once further redemption becomes remote. You cannot book it up front. And where state escheat law requires unredeemed amounts to be remitted, ASC 606-10-55-49 has you recognize a liability rather than revenue.
The scale is not trivial. Bankrate, surveying 2,373 US adults in August 2024, found that 43% hold at least one unused gift card, voucher or store credit, averaging $244 among those who do. Some of that will be redeemed late, some never, and some is escheatable. Treat gift-card float as working capital you are holding, not as margin you have earned.
On the upside, the overspend effect is real but softer than the industry quotes it. First Data’s 2017 study (more than 2,000 US consumers) found 75% reported spending above the card value, by an average of $38. BHN’s January 2026 research (n = 2,138) put the average upspend at $73, with nearly 60% saying they would spend beyond the card’s value. These are self-reported figures from gift-card companies, the same study series has reported $21, $38 and $59 in consecutive waves, and none of them measures merchant-side average order value. Plan for some upspend; do not build a forecast on a specific number.
How do I use gifting features for the holidays?
Build for the buyer who is not the recipient. Gift messages, scheduled delivery, clear shipping cutoffs and a recipient-friendly returns path are the features that make a gift purchase possible, and digital gift cards are what you sell once shipping is no longer an option.
Holiday shopping runs late. NRF and Prosper, surveying 8,005 US adults between December 1 and 10, 2025, found consumers had completed just over half their holiday shopping by early December, with 158.9 million expected to shop on Super Saturday. Nobody publishes a missed-cutoff figure, so we will not invent one, but the shape of the season is clear enough to plan around.
Digital gift cards are available after the physical cutoff passes, which is their strongest seasonal argument. They are not the only option left, though, and we should not say so: in-store pickup, local delivery, expedited carriers and other digital products are all still live. What the data supports is that digital gift cards are genuinely popular, with BHN reporting that 49% of US consumers bought one in the 2024 holiday season, up five points year on year. Returns deserve more attention than they usually get too: BHN found 22% of consumers needed to return a holiday gift, up from 16%, and about 8 in 10 of those wanted a gift card for the return. The detail is in gifting features.
What are the common gift-card mistakes?
Hiding them, sending the card to the wrong person, booking the cash as revenue, and letting the expiry and fee policy go stale. The first is a merchandising problem; the other three are the ones that cost real money.
The delivery mistake is the most common and the most avoidable. If you have not enabled the recipient-information form, every gift card you sell emails to the buyer, who then has to forward it themselves. That turns a thoughtful gift into an administrative task, and most buyers will not realize until after they have paid.
The accounting mistake is quieter. Gift-card float looks like a very good month until the redemptions arrive in a quarter where you have already spent it. Model redemption timing, and keep the escheat exposure visible if you sell into US states that claim it.
The policy mistake is the one with legal consequences. Expiry and fee rules change, California’s threshold moved on April 1, 2026, and a policy page written three years ago is not a defense. Put a review date on it.
How do I promote gift cards beyond the holidays?
Attach them to the occasions that already exist, and to the moments where a gift card solves a problem you are currently losing. Birthdays, weddings and graduations are year-round; returns and out-of-stock items are year-round too.
The returns case is the strongest non-seasonal one, and it has data behind it: about 8 in 10 of the consumers BHN found needing to return a holiday gift wanted a gift card as the outcome. Offering store credit as a first-class return option keeps the revenue and gives the customer something they have said they want.
The other steady use is the self-purchase buyer, who is now the majority of the gift-card market in BHN’s 2026 data at 56%, up from 31%. People buy gift cards to budget: 74% told BHN the cards helped them stick to their holiday spending plan. That is a different message from gifting, and a store that only markets gift cards in December is talking to the smaller half of the audience.
Measure it the way you would measure any offer. Track gift-card sales, redemption rate and lag, the average basket at redemption against your store average, and the share of redemptions from first-time buyers. That last one is the number the industry asserts and nobody publishes, and you are in a position to actually know it for your own store.
We treat gift cards as acquisition and cash flow, and build the gifting path to match.
We make gift cards visible and easy to send, add the gifting features seasonal buyers expect, and build the post-redemption follow-up that turns a one-time recipient into a repeat customer, then measure the acquisition and revenue, not just gift-card sales.
It’s the same measurement-first discipline behind our conversion optimization and ecommerce operations work, where we rebuild the buying path and measure the result .
// we would rather show up in your reporting than in your inbox
Frequently asked questions
Are gift cards worth selling for a small store?
Usually yes, because they are native on every Shopify plan and cost nothing to switch on, and because the demand is real: NRF and Prosper put expected US holiday gift-card spending at about $29bn with 43% of shoppers planning to buy one. Just treat the cash as a liability you are holding rather than revenue you have earned.
Do gift cards come with Shopify, and on which plans?
All of them. Shopify enabled gift cards on every Shopify plan in April 2020 and described it as indefinite. You can create and sell gift card products and issue cards from the admin with no third-party app. An earlier version of this page said paid plans only, which was out of date.
Can gift cards expire, and can I charge a fee?
It depends on the market and the answer is specific. Under US federal law the funds cannot expire earlier than five years after issuance or the last load, and inactivity fees are barred unless the card has been dormant a full year, the fee is disclosed on the card itself, and no more than one is charged per month. California bars expiry and fees on most cards and, since April 1, 2026, requires cash redemption of balances under $15, electronic cards included. The EU and UK have no statutory minimum validity, but an unfair expiry term is unenforceable.
How should I account for gift-card sales?
Not as revenue when sold. Under ASC 606 a gift-card sale is a contract liability recognized as revenue on redemption, with unredeemed value handled as breakage in proportion to the pattern of redemptions, or only once redemption becomes remote. Where state escheat law requires remittance, the amount is a liability rather than revenue.
Do gift-card recipients really spend more than the card value?
Often, but treat the published numbers carefully. They range from $38 average overspend with 75% of consumers (First Data 2017) to $73 with nearly 60% (BHN, n=2,138, January 2026). All of them are self-reported surveys run by gift-card companies, the same series has swung from $21 to $59 across consecutive waves, and none measures merchant-side average order value.
Sources
Shopify, “Gift cards are now available on all Shopify plans,” April 5, 2020. States that Shopify is “enabling our gift cards feature on all Shopify plans indefinitely.” This supersedes any paid-plan requirement, which an earlier version of this page repeated. Shopify on gift cards for all plans
Shopify Help Center, “Gift card products.” Product documentation. Supports only the mechanics: that you “activate gift cards on your store to sell gift card products, as well as create gift cards directly from your Shopify admin,” with no third-party app, and that Shopify stores and redeems the balance at checkout. It carries no market, behavioral or accounting data, so we do not cite it for any. Shopify Help: gift card products
Shopify Help Center, “Add gift card recipient fields.” The actual recipient mechanic: the recipient email, recipient name, message and “Send on” date fields are enabled in the theme editor under the Buy buttons block (“Show recipient information form for gift card products”), and are native to Online Store 2.0 themes from version 9.0.0. Without it, the gift-card notification goes to the purchasing customer, not the recipient. Shopify Help: gift card recipient fields
Shopify Help Center, “Modify gift card settings.” “By default, gift cards don’t expire because it’s illegal in some countries for gift cards to expire”; if an expiry is set, the default is five years; and merchants should “verify that you’re following the rules and regulations for gift cards in your country.” Shopify Help: gift card settings
US federal: Credit CARD Act of 2009, Title IV; Electronic Fund Transfer Act §915 (15 U.S.C. §1693l-1); Regulation E, 12 CFR §1005.20. Funds must not expire earlier than the later of five years after issuance or five years after the last load (§1005.20(e)). Dormancy, inactivity or service fees are barred unless all three conditions hold: no activity for the one-year period ending on the fee date; the fee and its frequency disclosed clearly and conspicuously on the card itself; and not more than one such fee in any calendar month (§1005.20(d)). Exemptions at §1005.20(b) include loyalty, award and promotional cards, paper-only certificates, reloadable cards not marketed as gift cards, and venue-admission cards. Applies to cards sold on or after August 22, 2010 (§1005.20(g)). US Regulation E gift card rules
California: Civil Code §1749.5, as amended by SB 22, effective April 1, 2026. Raises the small-balance cash-redemption threshold from $10 (in place since 2008) to under $15: “a gift certificate with a cash value of less than fifteen dollars ($15) is redeemable in cash for its cash value.” The amended definition of “gift certificate” expressly includes electronic gift cards. California separately bars expiry dates and service fees on most gift certificates. Morgan Lewis on California gift card law
EU: Council Directive 93/13/EEC on unfair terms in consumer contracts (adopted April 5, 1993). There is no general EU gift-card expiry rule. A short or buried expiry is challenged as an unfair term under Article 3(1), which turns on whether a non-negotiated term, “contrary to the requirement of good faith,” causes “a significant imbalance in the parties’ rights and obligations”; Article 6(1) makes unfair terms “not binding on the consumer.” EU Unfair Contract Terms Directive
UK: Consumer Rights Act 2015, Part 2 (sections 61 to 76). There is no statutory minimum validity period for UK gift cards. An unfair expiry term is unenforceable under s.62(1), “An unfair term of a consumer contract is not binding on the consumer,” with the fairness test at s.62(4); s.64(2) shelters a main-subject-matter or price term from that test only where it is “transparent and prominent.” There is also no US-style escheatment of unredeemed balances in the UK. UK Consumer Rights Act 2015 (Part 2)
EU VAT: Council Directive (EU) 2016/1065 (the Vouchers Directive), applicable from January 1, 2019. Article 30a distinguishes a single-purpose voucher, where the goods or services and the VAT due are “known at the time of issue of the voucher,” from a multi-purpose voucher. Article 30b taxes the transfer of a single-purpose voucher as the supply itself, while for a multi-purpose voucher VAT falls at actual supply and “each preceding transfer of that multi-purpose voucher shall not be subject to VAT.” EU VAT voucher directive (2016/1065)
Revenue recognition: ASC 606-10-55-46 to 55-49 (breakage and unexercised rights). A gift-card sale is a contract liability, not revenue. Where the entity expects to be entitled to breakage, it is recognized in proportion to the pattern of rights exercised; where it does not, breakage is recognized only when further redemption becomes remote. Under 55-49, amounts that state escheat law requires to be remitted are recognized as a liability rather than revenue. RevenueHub on gift card breakage
Bankrate, “Gift card survey,” fieldwork August 19 to 21, 2024 (YouGov Plc, n = 2,373 US adults, of whom 1,010 held unused cards). 43% of US adults hold at least one unused gift card, voucher or store credit, averaging $244 per affected person. Self-reported survey data. Bankrate gift card survey
First Data, 2017 Prepaid Consumer Insights Study (more than 2,000 US consumers, self-reported). 75% of consumers reported spending more than the card value, by an average of $38, up about $10 on the prior year. Note that the same study series reported $21, then $38, then $59 across consecutive waves, so the figure is not stable enough to quote as a fixed fact, and it measures consumer recall rather than merchant transaction data. PaymentsJournal prepaid and gift card study
Blackhawk Network (BHN), gift card research published June 8, 2026 (n = 2,138 US adults 18+, fielded January 2026). Nearly 60% said they would spend beyond a card’s original value, by an average of $73; 77% planned to buy gift cards in 2026; and purchasing gift cards for their own use rose from 31% in 2025 to 56% in 2026. Self-reported survey data from a gift-card company. BHN research on gift card momentum
Blackhawk Network (BHN), post-2024-holiday US survey (sample size not disclosed by BHN). 49% of consumers bought digital gift cards in the 2024 holiday season, up 5 points on 2023; 74% said gift cards helped them stick to their holiday budget; 22% needed to return a holiday gift, up from 16% in 2023, and about 8 in 10 of those wanted gift cards for returns. BHN research on gift card holiday demand
NRF with Prosper Insights & Analytics, 2025 winter holiday gift-card data. 43% of shoppers planned to buy at least one gift card, with about $29bn in expected US gift-card spending. Consumer survey, not transaction data. NRF on gift card popularity for 2025 holidays
NRF with Prosper Insights & Analytics, Super Saturday release (n = 8,005 US adults, fielded December 1 to 10, 2025). Consumers had completed just over half (51%) of their holiday shopping by early December, with 158.9 million expected to shop on Super Saturday. This measures late shopping, not missed shipping cutoffs, which nobody publishes. NRF Super Saturday shopper data