Gift card program setup: 7-step guide for e-commerce stores

Consider a customer who just bought an item they've been wanting for weeks. It's already exciting to own it, but when they receive a free gift card for their next purchase, the experience becomes even more valuable: turning a single transaction into an ongoing relationship.

Gift card incentives like these significantly impact customer loyalty and behavior, driving repeat purchases, deeper engagement, and increased revenue.

This ultimate guide will make it easy for online businesses to set up a successful, high-converting gift card program. We also cover key platforms and tools, common beginner's challenges, and proven best practices for success.

Before diving into the steps, let's go over the basics. This section explains the definition of a gift card program, how the program works, and the benefits for e-commerce businesses.

A gift card program, or simply a gift card, is a system that enables businesses to issue and sell cards with a stored value. The value on the card is often a fixed monetary amount or a pre-defined non-cash equivalent, which the buyer or the recipient can redeem later for the company's goods or services.

Gift card programs can be issued as rewards or incentives for customers, employees, or partners. They are common as part of many brands' promotion strategy during occasions like holidays, birthdays, anniversaries, customer milestones, or special promotional events.

Gift card programs are a simple, effective tool for customer rewards and promotional campaigns.

How a basic gift card program works:

1. Acquisition: A customer purchases or a recipient is given a gift card, which may be a physical card or a digital e-card.

2. Redemption: The cardholder uses the card for payment, either by entering the card code on an eCommerce platform or presenting the physical card in-store.

3. Validation and acceptance: The business processes the transaction. Their POS (Point of Sale) system or eCommerce platform checks the card's balance and validity, then accepts it as payment.

4. Transaction completion: The purchase amount is deducted from the card's balance. Any remaining value stays on the card for future use.

Gift card programs are widely used across many industries, including retail, restaurants and cafes, salons and spas, fitness and wellness centers, corporate gifting, and nonprofits. In e-commerce, gift card programs are becoming a must-have, with almost half of consumers reporting increasing gift-card requests from family and friends.

Here are gift card benefits for e-commerce:

• Increase sales and revenue: Gift cards don't just generate prepayments. Customers often spend more than the card value. A 2024 study by the GCVA and Global Data showed that over two-thirds (68%) of users spent above the original card amount.

• Improve cash flow: Merchants receive payment upfront when the card is purchased, even before it is redeemed.

• Attract new customers: Gift cards introduce your brand to new buyers when recipients are friends or family who haven't shopped with you before. A significant portion of Gen Z and Millennials said they first tried a brand because someone gave them a gift card.

• Build customer loyalty: Recipients return to redeem their cards and often become repeat customers.

• Marketing and promotional flexibility: eGift cards can be used in campaigns, seasonal promotions, or as incentives to drive engagement. At the same time, they require no physical production or shipping, reducing overhead.

In summary, e-commerce gift cards work. They help online merchants increase sales, improve customer retention, and deliver a strong return on investment.

Setting up a gift card campaign may seem simple. You just create the card, setting its value, making it available for purchase, and allowing customers to redeem it at checkout. Almost everyone can do it with ease.

The real challenge, however, is making the program actually work. This includes selecting the right e-commerce platform and redemption channels, accurately configuring card logistics, and ensuring proper tracking for financial reporting. Otherwise, you risk leaving a lot of value on the table.

In that case, a detailed, step-by-step guide would be of tremendous help. The following section will walk you through the entire gift card setup process in seven main steps.

A gift card solution is the toolkit you need to make, handle, send, and accept digital and physical cards. You can build your own system, integrate with an independent gift card provider, or adopt the native features of your existing store.

If you sell online, the most straightforward approach is to leverage your current e-commerce system. Most big platforms, namely Shopify, WooCommerce, and BigCommerce, offer a built-in gift card feature or provide easy access to third-party solutions.

Shopify's built-in gift card feature

Below are some key criteria for choosing a good, robust gift card tool:

• Seamless integration with your existing POS/eCommerce system.

• Support for both physical and digital (eGift) cards.

• Real-time balance tracking and reporting capabilities.

• Customization options for branding and design.

• Low processing fees and high security compliance.

Let's look at some e-commerce platforms that support gift card programs and compare them:

For easy reference and practical steps, we will use Shopify as the reference platform for examples and walkthroughs.

This step involves deciding which format of gift voucher is most suitable to issue. It is not necessary to choose one format over the other and one can feel free to combine both. The key is to understand the optimal use case for each format and to align that choice with specific customer journeys.

• Physical gift cards: These are tangible plastic or paper cards with magnetic stripes or barcodes. Physical programs are best for brick-and-mortar stores, event-based promotions, premium gifting, and more. However, issuing physical cards incurs significant expenses for printing, production, and shipping.

• Digital gift cards: Also known as e-commerce gift cards or eGift cards, these are unique codes or links sent instantly via email or SMS. They are best for online-only stores, last-minute purchases, driving immediate sales, and minimizing operational costs.

• Both formats: This involves offering both options, physical gift cards vs eGift vouchers in one integrated solution. Using both formats is best when operating an omnichannel model (selling both in-store and online) or when targeting broad demographics.

Example of a digital gift card

Choosing the right gift card type depends entirely on your business objectives. They can be short-term goals or long-term strategies.

For example, I have an online fashion store. I want to significantly increase sales volume specifically for the Black Friday/Cyber Monday (BFCM) period, which occurs in a few months. My primary sales channel is e‑commerce. Ideally, I should issue digital cards.

However, if I had both a brick‑and‑mortar location and an online shop, I would deploy a combined strategy. The reason is, BFCM still sees strong in‑store participation.

This is where the practical, hands-on implementation begins. To cover all aspects of setup, there are two primary scenarios: creating a brand-new program or refining existing settings. Since this is a comprehensive "how-to" guide, we will focus on providing instructions for a complete setup from scratch.

So, what does "configuring gift card settings" actually include? In the context of gift card programs, it entails defining the card product's operational rules and ensuring legal adherence within your chosen platform. This initial setup involves key actions:

• Setting core policies: Define the main policies about how the card is used and display these terms clearly on your website's terms and conditions page, so both you and customers fully understand the program and avoid future disputes. It doesn't have to be lengthy. A text or document detailing refund eligibility, expiration dates, balance carrying, partial redemption rules, and replacement procedures is enough.

• Decide card values: Figure out the exact amounts of gift card denominations you will sell. This should be determined based on customer demand, average order value, and your margin structure.

• Establish sending rules: Choose how the cards get to the customer: manually, automatically, or only through special promotions, such as "spend X get Y." Set up the delivery method for digital cards and the activation process needed for physical cards.

• Configure redemption options: Set up the checkout process for using the card. This includes deciding whether the system accepts partial or full amounts on one purchase, and how any remaining balances are handled.

Gift card terms and conditions example (Image: Vend Gift Cards)

Suppose you want to create a seasonal digital gift card for the upcoming Christmas campaign. Your objective is to offer a festive, limited-time product that customers can easily gift during the holiday rush.

Step 1: From your Shopify admin, select Products > Gift Cards > Add gift card product.

Shopify gift card setup guide

Step 2: Complete the product form for your new gift card listing. The fields include:

• Title: Keep it clear and under 60 characters

• Description: Briefly explain how the card works and the delivery method in 150-250 characters. Consider using bullet points for key terms to make it easy to read.

• Denominations: Set fixed values based on your average order value (e.g., $25, $50, $100).

• Media: Upload a branded gift card image

• Sales channels: Select where cards are sold - Online Store, POS, or both.

• Product organization: Set Type to "Gift Card" and add optional tags like "digital-card" for easier management.

• Theme and gift card template: Use your theme's gift card template for consistent branding. Enable recipient fields if supported.

• Search engine listing: Complete meta fields to improve search visibility.

Fill in the blank fields to getting started

Step 3: Set status to "Active" to launch immediately or "Draft" to launch later. Click "Save gift card product" to finish.

The gift card product will appear in your online store. (Image: Casual Ecommerce)

Once these settings are saved, the platform automatically generates a unique gift card code for every purchase. For digital Shopify gift cards, the system emails the code directly to the buyer or to the final recipient. The recipient can then redeem the code at checkout just like any other payment method.

To update existing cards: Go to Products > Gift Cards and edit directly.

For physical cards: Go to Products > Gift Cards > Issue gift cards to create codes, then link them to your POS for activation.

This section covers specific gift card design tips and rules that increase the likelihood of conversions and emotional appeal. While design might seem like a small detail, it surprisingly plays a significant role in customer decisions. 69% of gift-card buyers say design is important, and 40% admitted making an impulse purchase because they liked the design. Create custom gift cards that match your brand identity:

• Color and contrast: Match your brand colors to the occasion (e.g., red/green for holidays). Use strong contrast for text readability.

• Visual design: Keep graphics simple and clean with plenty of white space. The card value should be the main focus.

• Text hierarchy: Ensure the gift amount is immediately clear. Use different text sizes to guide the eye (title → value → message).

• Personalization: Offer design options—63% of customers want to choose designs, 46% want to upload custom images.

• Brand consistency: Align logos, colors, and fonts with your brand identity. Playful brands use fun fonts; luxury brands use elegant typography.

• Seasonal themes: Add holiday motifs (snowflakes, flowers, fireworks) while maintaining brand consistency.

Example of good gift card design (Image: Vuoriclothing)

You should also create a branded email for your eGift cards. Include your logo, a custom header image, and a consistent style in the email. This step powerfully reinforces your brand the moment recipients first interact with the card.

Make sure your eGift card delivery email matches your brand perfectly to elevate the customer experience (Image: Really Good Emails)

If you plan to offer physical gift cards, keep sustainability in mind. Modern consumers care about eco-friendly options more than you might expect. Specifically, 51% of respondents in a recent report said they value sustainable materials when choosing gift cards.

This step is optional but useful for growing stores. As your business scales with more traffic and customers, manual management becomes difficult. You'll need automation, scheduled deliveries, bulk gift cards issuing and behavior-based triggers.

Most native platforms (Shopify, BigCommerce) lack these advanced features—you'll need third-party apps. Although these solutions generally involve a recurring fee, they provide merchants with a host of functionalities, such as:

• Scheduled delivery: Allows you to define future send dates, support recurring gifts, or set up bulk schedules.

• Unique designs: Gives you the ability to upload your own artwork or use tools for generating designs, such as AI-powered options.

• Advanced tracking: Provides detailed tracking of balances, supports card top-ups or reloading, sends reminders for unused funds, and allows for bulk code generation.

• Bulk issuance and CSV import/export: Lets you create or upload numerous codes simultaneously using CSV files.

• Balance visibility: Offers an on-site widget so customers can easily verify their gift card balance themselves.

• Reminder automation: Automatically alerts customers when their cards are about to expire or remain unused.

• Multi-channel redemption: Ensures your gift cards are usable across all platforms, including digital stores, physical cards, and point of sale systems.

Gift card app lets you customize and add more elements (Image: GiftKart)

For Shopify businesses, the best gift card apps are ones with the "Built for Shopify" badge and strong reviews, usually 4.7 stars or higher. The exact setup process will be different for each app, but installing it and following the guided steps inside the app is usually all you need to launch your customized gift card program.

Integration is useful when you want gift cards to work seamlessly with your existing systems, such as e-commerce platforms, POS, CRM, or email marketing tools. For custom integrations, Shopify's gift card API enables automated workflows, while WooCommerce requires third-party gift card API access for similar functionality.

Shopify's built-in and third-party gift card apps support checkout application, email delivery, POS redemption, scheduled sending, bulk issuance, reporting, and CRM sync. However, some tasks still require manual work integration:

• Importing external or pre-generated gift card codes (physical or digital) not issued by Shopify

• Adjusting balances for pre-existing codes outside Shopify ecosystem

• Redeeming completely external gift cards at Shopify checkout

• Custom QR code linking for physical cards if not generated by Shopify

• Any integration with a tech stack that requires bespoke automation beyond app capabilities

Activate your gift card program and track key metrics like sales, redemptions, and customer engagement. Continuously monitor performance, A/B test designs or messaging, refine thresholds for automated triggers, and streamline workflows. We will cover detailed optimization strategies below.

In case you sell those cards on both online and offline channels, you will need to further step, which is working with a reliable external print vendor or fulfillment partner for physical cards. This involves selecting cardstock and design specifications, managing bulk printing orders, and coordinating shipping or delivery logistics. You can also use Shopify's service.

Those are the 7 basic steps to start a gift card program for any business. In essence, gift card programs themselves are simple to begin. There is not much to worry about, except for a few key points:

1. Fraud or security risks: Gift cards are a target for fraud because they can be redeemed like cash. Digital codes sent via insecure email or physical cards without tamper-evident packaging can be stolen, cloned, or used by unauthorized parties. This can result in customer disputes, chargebacks, and direct financial loss for your business.

2. Tax and liability tracking: Gift card sales are considered liabilities until redeemed. Failing to properly track unredeemed balances, breakage, or state unclaimed property rules can lead to tax penalties, inaccurate accounting, and legal issues. Also, it's necessary to report these liabilities to tax authorities and include them in financial statements.

3. Redemption setup issues: If your gift cards are not correctly integrated with checkout systems or POS, customers may be unable to redeem them, causing frustration and lost sales. Testing both online and offline redemption flows prevents these operational errors.

4. Poor communication of terms: Customers need to know expiration dates, fees, or usage limitations. Failing to clearly communicate terms not only causes disputes, customer dissatisfaction, and chargebacks but also erodes trust and harms brand reputation, especially for first-time buyers.

5. Legal compliance: Ensure you follow state and national laws regarding e-commerce gift cards. For example, in the U.S., the Credit Card Accountability Responsibility and Disclosure (CARD) Act limits expiration and fees for most gift cards, while unclaimed property laws require reporting unused balances. If selling internationally, local e-commerce and consumer laws may apply.

Selling with gift cards or selling the gift cards themselves becomes much more effective when you actively promote them. In today's market, customers often overlook or forget that gift cards exist. A focused gift card promotion campaign drives usage, reminds customers of unused balances, and strengthens your brand presence at various touchpoints, maximizing the return on investment (ROI).

Here are some of the best universal marketing tactics to promote your gift card programs:

This tactic is all about sending specific messages to your subscriber list. You can seamlessly blend gift card offers into your regular newsletters and automated email flows. Use dynamic, eye-catching blocks with phrases like "last-minute gifting" to capture impulse buyers effectively.

Build excitement by running contests, giveaways, and user-generated content challenges across platforms like Instagram, Facebook, and TikTok. Utilize engaging short videos, timely themed posts, or collaborate with influencers to boost campaign reach and strengthen your credibility.

Boost audience engagement by using game-like mechanics such as quizzes, polls, and spin wheels. Promote your gift card program by integrating these games into your stores' website or app and reward visitors with small-value gift cards.

Use timely offers linked to holidays or key retail periods such as Christmas sales or Black Friday. Launch limited-time bonus-value deals, special themed card designs, or countdown timer offers during major holidays. Remember to start seasonal campaign planning 4-6 weeks in advance to align with peak gift-buying periods.

Rewarding your loyalty program members with gift cards encourages immediate purchases and leads to the selection of higher-value gift cards. For instance, offer bonus points when members purchase gift cards or issue VIP-only cards with extra value to stimulate sales.

Beyond standard pricing, you can offer gifts with purchase or discounted or bonus-value gift cards. These incentives not only encourage customers to buy larger card amounts but also increase the average order value and promote higher denomination purchases. Moreover, this strategy offers the ability to enhance abandoned cart recovery.

For instance, you can run attractive deals such as "buy a $50 card and get a $10 bonus" or offer "20% off selected denominations."

Make gift cards easy to find and purchase on your site. Dedicate a specific page to gift cards, feature promotional banners across your site, and add the option to buy a gift card seamlessly within the checkout flow alongside other products.

And if you sell both online and offline, remember to use compelling signage, integrate gift card options at the POS, and train staff to actively upsell.

At this point, you can confidently run a gift card program on your own. You also know how to apply marketing tips and understand common pitfalls. Before we conclude the guide, let's review the final section on performance evaluation. In the end, it's the numbers that show whether your gift card strategy is actually working.

Here are some common metrics to track:

• Redemption rate: The percentage of cards redeemed versus those sold. A "good" redemption rate typically falls around 50-70% for many brands. A lower rate may signal poor follow-up processes or user experience friction.

• Breakage rate (Unredeemed value): The percentage of card value that is never redeemed. Industry or actuarial estimates often place this rate between 10% and 20%, depending on a company's historical redemption curve.

• Time to redemption: The average time between purchase and redemption. Over 90% of redeemed gift cards are used within one month, with the bulk redeemed in the first week.

• Incremental spend/Overspend: The extra amount customers spend beyond the card's balance. A "healthy" overspend depends on your margin and cost structure, but achieving a strong average order value increase of 20-40% is common.

• Liability trend: How much unused card balance you owe over time. If your unredeemed liability grows for more than 12-24 months, it may indicate poor redemption or forgotten balances.

You can track basic metrics using built-in or native reporting features in your e-commerce or gift card platform. For more advanced KPIs such as time-to-redemption patterns and breakage trends, you may need to integrate with dedicated platforms for deeper gift card analytics. For instance, use Google Analytics for customer behavior, Mixpanel for product analytics, and BI platforms for centralized data.

In addition to these separate numbers, there is also the single most important metric: the program's overall return on investment (ROI). It indicates profitability and directs what to do next.

This metric is calculated as:

(Redemption + Breakage + Incremental Spend - Costs) / Total sales

If your gift card ROI is negative, it indicates you are losing money. You must optimize immediately by refining card incentives, improving redemption flows, or reducing costs. If your ROI is strongly positive, feel free to double down on marketing and focus on high-value card tiers.

That's about it: a straightforward guide on creating a successful e-commerce gift card program for businesses. All you need to do is plan your program, set up the gift cards, integrate them with your systems, launch, market actively, and monitor performance.

Ready to boost revenue and increase sales? Begin by setting up your first digital card offer today!

The costs associated with launching a gift card program typically cover platform fees, transaction processing, physical card printing (if needed), and ongoing marketing. For newbies, expect an initial setup investment of $200-$500. Continuous costs range from $50‑200 per month, covering software subscription, POS integration (if selling across both online and offline channels), or ongoing marketing campaigns.

Yes, you absolutely can. You simply need an e-commerce platform capable of handling order fulfillment, inventory tracking, and shipping logistics. As long as your business can manage the card stock, selling physical cards online allows you to significantly reach a wider audience.

At the Point of Sale, gift cards are redeemed either by scanning the code or manually entering it. The POS system then automatically updates the remaining balance, records the liability change, and integrates all redemption data into your sales reports.

Under U.S. federal law, most gift cards are legally required to remain valid for at least five years from the date of issue or the last time value was added. Dormancy or inactivity fees are allowed, but the Consumer Financial Protection Bureau enforces strict rules requiring clear disclosure of all terms.

Definitely. Gift cards are commonly issued as a form of loyalty reward. More advanced systems even permit the integration of both loyalty balances and gift card credit onto a single card for unified customer engagement.