How Do Shopify Gift Cards Work? A Complete Guide

Gift cards look simple from the shopper's side, but there's a fair amount going on behind the scenes: codes, balances, notifications, liability accounting and fraud prevention. Here's the whole lifecycle.

1. The gift card product

A merchant creates a gift card product with denominations as variants ($25, $50, $100 and so on). It sits in the catalog like any product but has no inventory or shipping. If you haven't set one up, follow how to add gift cards to Shopify.

2. Purchase and delivery

When a customer buys a gift card:

• Shopify generates a unique code (typically 16 characters).
• The buyer, or a recipient they named at checkout, gets a gift card email with the code and a link to a gift card page showing the balance and a QR code.
• The order appears in your admin like any other, with the gift card line item marked as such.

Physical gift cards sold through Shopify POS are activated at the register and carry their own codes.

3. Redemption

At checkout, the holder enters the gift card code in the "Gift card or discount code" field. Shopify:

• Checks the balance.
• Deducts up to the order total.
• Asks for another payment method if the card doesn't cover everything.

If the card is worth more than the order, the leftover balance stays on the card. The holder can use the same code again later.

Gift cards are a payment method, not a discount. That means they work alongside discount codes and don't count against discount combination limits. Customers can also apply more than one gift card to an order.

4. Balances and checking

Customers check their balance by opening the link in their gift card email. Merchants see every card under Products > Gift cards with:

• Initial value and current balance
• Customer it's assigned to
• Expiry date if set
• Order history showing where it was used

You can search by the last four characters of a code.

5. Managing cards as a merchant

From the gift card list you can:

• Disable a card (for example, if it was bought with a fraudulent payment).
• Change the expiry date.
• Resend the gift card email to the customer.
• Assign it to a different customer record.
• Issue new cards manually for store credit, contests or service recovery.

You can't change the code itself or increase the balance of an existing card. If you need to top up, issue a new card.

6. Refunds involving gift cards

Refunding an order paid by gift card: Shopify can refund the amount back to the gift card or, where supported, to another method. Returning value to a gift card keeps the money in your store.

Refunding a gift card purchase: If the card hasn't been used, you can refund the order and disable the card. If part of it was spent, refund only the unused balance.

For general refund timing, see how long Shopify refunds take.

7. Expiry rules

Shopify lets you choose whether cards expire. But laws often decide for you. In the US, federal rules generally require gift cards to remain valid for at least five years, and some states go further. Many EU countries and Canadian provinces have their own rules. If in doubt, set cards to never expire. It's simpler and customers appreciate it.

8. The accounting side

Selling a gift card creates a liability, not revenue. Revenue is recognized when the card is redeemed. Shopify's finance reports show gift card sales and redemptions separately so your bookkeeper can reconcile them. Unredeemed balances ("breakage") have specific tax and escheat rules in some jurisdictions, so ask an accountant.

9. Fraud considerations

Gift cards are popular with fraudsters because they're instantly usable and easy to resell. Protect yourself by:

• Reviewing high-value gift card orders flagged by Shopify's fraud analysis.
• Holding fulfillment of digital cards on risky orders.
• Disabling cards immediately if a chargeback arrives.

Why they're worth offering

Gift cards bring in new customers through the recipient, often lead to spending above the card value and rescue sales after shipping cutoffs. Treat them as a marketing tool and promote them during peak seasons. Our list of Shopify marketing strategies covers ways to fit them into your calendar.

Frequently asked questions

Can a Shopify gift card be used more than once?

Yes. If the order total is less than the card balance, the remainder stays on the card for future purchases.

Can gift cards be used in physical stores?

Yes, with Shopify POS. Shopify also sells physical gift cards for POS in supported countries.

Can customers combine a gift card with a discount code?

Yes. Gift cards are a payment method, not a discount, so they can be used alongside eligible discount codes.

Sources and further reading

• help.shopify.com/en/manual/products/gift-card-products

Platform features, prices and policies change. Check the official help pages linked above before you act on a detail that matters to your store.