Gift cards and store credit represent two of the most powerful tools in your Shopify store's arsenal for driving revenue and building customer loyalty. When someone purchases a gift card, you receive immediate revenue while creating a future customer touchpoint. When you issue store credit, you keep revenue within your ecosystem instead of losing it to refunds.
According to recent retail data, gift card recipients spend an average of 20-40% more than the card's face value when redeeming. Store credit programs see even higher retention rates, with customers returning to use their balance rather than shopping elsewhere.
This guide walks you through everything you need to know about implementing both systems on Shopify, from basic setup to advanced loyalty integration strategies.
Understanding Gift Cards on Shopify
Shopify includes native gift card functionality across all plans, making it accessible whether you're just starting out or running an enterprise operation. Before diving into setup, let's understand how gift cards work within the Shopify ecosystem.
How Shopify Gift Cards Function
Gift cards in Shopify work as store-specific payment instruments. When a customer purchases a gift card, they receive a unique 16-digit code. This code can be entered at checkout to apply the gift card's value toward any purchase.
Key characteristics of Shopify gift cards:
- No expiration by default - Shopify gift cards don't expire unless you configure them to (check local laws as some jurisdictions prohibit expiration)
- Partial redemption - Customers can use part of a gift card balance and save the rest
- Stackable payments - Multiple gift cards can be combined, and gift cards can be used alongside other payment methods
- Transferable - Gift card codes can be shared with others
- Trackable - Full visibility into issuance, balance, and redemption history
Digital vs Physical Gift Cards
Shopify supports both digital and physical gift cards, each with distinct use cases and implementation requirements.
Digital Gift Cards
Digital gift cards are delivered electronically, typically via email. They're instant, cost-effective, and increasingly preferred by customers who want immediate gifting options.
Advantages of digital gift cards:
- Instant delivery (perfect for last-minute gifts)
- No shipping costs or fulfillment complexity
- Easy to customize with personalized messages
- Lower fraud risk compared to physical cards
- Environmentally friendly
- Can be purchased and delivered 24/7
Best practices for digital gift cards:
- Create visually appealing email templates
- Allow customers to schedule delivery for specific dates (birthdays, holidays)
- Include clear redemption instructions
- Send delivery confirmations to purchasers
- Enable gift messages and personalization
Physical Gift Cards
Physical gift cards provide a tangible product that customers can wrap, hand-deliver, and display. They're particularly valuable for brick-and-mortar stores with online presence and brands focused on premium gifting experiences.
Advantages of physical gift cards:
- Tangible gift presentation value
- Impulse purchase opportunity at checkout
- Brand visibility when cards are displayed
- Collectible appeal for some brands
- Works for customers without email access
Physical gift card considerations:
- Requires inventory management
- Fulfillment and shipping costs apply
- Production lead time for custom designs
- Need secure activation process
- Higher fraud potential if not properly secured
For physical gift cards, you'll typically need a third-party app or print-on-demand service. Popular options include Shopify's POS hardware for retail locations, or apps like Gift Card Hero for online fulfillment.
Setting Up Gift Cards in Shopify
Let's walk through the complete process of enabling and configuring gift cards in your Shopify store.
Enabling Gift Card Products
- Access Products Settings: Navigate to your Shopify admin, go to Products > Gift cards
- Create Gift Card Product: Click "Add gift card product"
- Configure Denominations: Set up the values you want to offer ($25, $50, $100, etc.)
- Customize Appearance: Upload gift card images that match your brand
- Set Availability: Choose which sales channels will display gift cards
Configuring Gift Card Denominations
Strategic denomination selection impacts sales volume and customer behavior:
Entry-level denominations ($15-25):
- Lower barrier to purchase
- Good for casual gift-giving
- May attract price-sensitive customers
Mid-range denominations ($50-75):
- Most popular price point for most stores
- Suitable for various occasions
- Good balance of accessibility and value
Premium denominations ($100-250+):
- Targets serious gift-givers
- Often purchased for major occasions
- Higher average order value contribution
Custom amounts:
- Let customers choose exact values
- Maximizes flexibility
- Can increase average gift card value
Many successful stores offer 4-6 fixed denominations plus a custom amount option to cover all customer preferences.
Customizing Gift Card Templates
Your gift card presentation affects both purchase conversions and brand perception. Shopify allows customization of:
Email template elements:
- Header image or brand logo
- Gift card image/design
- Sender and recipient name display
- Personal message formatting
- Redemption code presentation
- Store information and links
Design recommendations:
- Keep designs clean and gift-appropriate
- Use high-quality images (minimum 2048 x 2048 pixels)
- Ensure text is readable across devices
- Include clear call-to-action for redemption
- Match seasonal themes for holiday promotions
Gift Card Fulfillment Settings
For digital gift cards, configure delivery settings:
- Navigate to Settings > Gift cards
- Set default delivery timing (immediate, scheduled, or custom)
- Configure sender notifications
- Enable/disable recipient previews
- Set up automated reminders for unused balances (via apps)
For physical gift cards, integrate with your existing fulfillment workflow or use specialized apps that handle printing and shipping.
Store Credit: The Customer Retention Engine
While gift cards drive new revenue, store credit keeps existing revenue within your ecosystem. Store credit can transform potential refund losses into future purchases and power sophisticated loyalty programs.
Understanding Store Credit vs Gift Cards
Though they function similarly at checkout, store credit and gift cards serve different strategic purposes:
| Aspect | Gift Cards | Store Credit |
|---|---|---|
| Primary purpose | Revenue generation, gifting | Retention, refund alternative |
| How acquired | Purchased by customers | Issued by merchant |
| Typical use case | Giving to others | Personal account balance |
| Revenue timing | Immediate payment | Converts potential refund |
| Customer perception | Gift/payment product | Loyalty/convenience benefit |
Store Credit for Returns and Exchanges
One of the most impactful uses of store credit is as a refund alternative. When customers request returns, offering store credit instead of refunding to their original payment method keeps 100% of the revenue in your business.
Benefits of store credit refunds:
- Retain revenue that would otherwise leave
- Guarantee future customer engagement
- Reduce payment processor refund fees
- Simplify international return processing
- Build positive customer relationships
Implementing store credit refunds:
In native Shopify:
- Open the order to be refunded
- Click "Refund" in the order actions
- Select items and quantities
- Choose "Refund to store credit" instead of original payment
- Process the refund
The store credit automatically appears in the customer's account and can be applied at their next checkout.
Store credit refund best practices:
- Offer bonus value (e.g., 110% store credit instead of 100% refund) to incentivize selection
- Make the option prominent in your return policy
- Train customer service to present store credit positively
- Set clear expiration terms (where legally permitted)
- Send balance reminders to drive return visits
Store Credit for Loyalty Programs
Store credit forms the foundation of effective loyalty programs, rewarding customers for engagement while ensuring rewards drive future purchases rather than cash outlays.
Points-to-Credit Systems
Convert customer loyalty points into spendable store credit:
- Earning: Customers earn points for purchases, reviews, referrals, social engagement
- Conversion: Points convert to store credit at defined ratios (e.g., 100 points = $1)
- Redemption: Credit applies automatically at checkout
Popular Shopify apps for points-to-credit programs:
- Smile.io - Comprehensive loyalty platform with points, referrals, and VIP tiers
- LoyaltyLion - Advanced loyalty features with store credit rewards
- Rise.ai - Specializes in gift cards and store credit automation
- Yotpo Loyalty - Combines reviews with loyalty program management
Referral Credit Programs
Reward both referrers and new customers with store credit:
- Referrer reward: $15 store credit when referred friend makes first purchase
- New customer bonus: $10 store credit on first order
- Tiered referrals: Increasing credit for more successful referrals
Review and Engagement Rewards
Incentivize valuable customer actions:
- Product reviews: $5 store credit for verified purchase reviews
- Photo/video reviews: $10 store credit for visual content
- Social sharing: $2-5 store credit for social posts
- Email signup: $5-10 store credit for newsletter subscription
- Birthday rewards: Special store credit on customer birthdays
Implementing Advanced Store Credit Strategies
Beyond basic refunds and loyalty points, store credit enables sophisticated customer retention strategies.
Win-Back Campaigns
Re-engage lapsed customers with surprise store credit:
- Identify customers who haven't purchased in 60-90+ days
- Send personalized email with store credit offer
- Include expiration to create urgency
- Track redemption rates and adjust credit amounts
Example: "We miss you! Here's $20 store credit to welcome you back - expires in 14 days."
VIP and Tier-Based Credit
Reward your best customers with ongoing credit benefits:
- Tier 1 (Bronze): 2% back in store credit on all purchases
- Tier 2 (Silver): 3% back + quarterly bonus credit
- Tier 3 (Gold): 5% back + monthly bonus credit + early access
Compensation and Service Recovery
Store credit handles customer service issues gracefully:
- Shipping delays: Automatic credit for late deliveries
- Product issues: Credit for minor problems (avoiding returns)
- Service complaints: Credit to resolve negative experiences
This approach often costs less than traditional compensation while keeping customers in your ecosystem.
Managing Gift Cards and Store Credit
Effective management ensures your gift card and store credit programs remain profitable and fraud-free.
Tracking and Reporting
Shopify provides built-in reporting for gift card activity:
Key metrics to monitor:
- Outstanding liability: Total unredeemed gift card value (this is a balance sheet liability)
- Redemption rate: Percentage of gift cards used within given timeframe
- Breakage: Gift cards never redeemed (revenue recognition varies by jurisdiction)
- Average redemption value: How much customers spend when using gift cards
- Overspend rate: Percentage of gift card orders exceeding card value
Accessing reports:
- Go to Analytics > Reports
- Filter for gift card reports
- View sales, redemptions, and balances
For store credit, most third-party apps provide dashboards showing credit issued, redeemed, and outstanding balances.
Preventing Gift Card Fraud
Gift cards are frequent fraud targets. Protect your program:
Common fraud schemes:
- Purchasing with stolen payment methods
- Code generation/guessing attacks
- Return fraud (buy item, return for gift card, sell card)
- Social engineering (convincing staff to share codes)
Prevention strategies:
- Enable fraud detection tools in Shopify
- Set purchase limits per customer/transaction
- Delay gift card delivery for high-value purchases
- Require account creation for purchases
- Monitor for unusual redemption patterns
- Use address verification for physical cards
Tax and Accounting Considerations
Gift cards have unique accounting treatment:
- At purchase: Record as deferred revenue (liability), not income
- At redemption: Recognize revenue for redeemed amount
- Breakage: Recognize revenue from unredeemed cards per accounting standards
- Expiration: Rules vary by jurisdiction; consult with accountant
Store credit may have different treatment depending on how it's issued. Work with your accountant to ensure proper recognition.
Apps and Integrations
While Shopify's native gift card features handle basics, third-party apps unlock advanced functionality.
Top Gift Card Apps
Rise.ai
- Advanced gift card workflows
- Store credit management
- Loyalty and referral integration
- Bulk gift card generation
- Advanced scheduling and automation
GiftUp
- Physical and digital cards
- Multi-currency support
- API for custom integrations
- Detailed analytics
Gift Card Hero
- Physical card fulfillment
- Custom card designs
- Bulk ordering for retail
Store Credit and Loyalty Apps
Smile.io
- Points, referrals, and VIP programs
- Store credit rewards
- Easy setup and customization
LoyaltyLion
- Enterprise-grade loyalty
- Advanced segmentation
- Multi-channel support
Loop Returns
- Returns automation
- Store credit-first workflows
- Exchange optimization
Integration Considerations
When selecting apps, evaluate:
- Shopify compatibility: Ensure full integration with current Shopify version
- Theme compatibility: Check for checkout and theme conflicts
- Reporting: Verify analytics meet your needs
- Pricing: Understand per-transaction fees vs flat rates
- Support: Check reviews for support quality
Gift Card and Store Credit Marketing Strategies
Maximize revenue from your gift card and store credit programs with strategic marketing.
Seasonal Campaigns
Gift cards spike during holidays. Prepare campaigns for:
- Black Friday/Cyber Monday: Bundle gift card bonuses (buy $50, get $10 bonus)
- Christmas/Hanukkah: Push gift cards as perfect last-minute gifts
- Valentine's Day: Romantic gifting angle
- Mother's Day/Father's Day: Family gifting promotions
- Graduation season: Gift cards for graduates
Promotional Strategies
Bonus card promotions: "Buy a $100 gift card, get a $20 bonus card free"
- Increases average gift card purchase value
- Creates two customer touchpoints
- Bonus cards often expire sooner, driving urgency
Bundle with products: "Free $25 gift card with any purchase over $150"
- Drives higher order values
- Creates guaranteed return visit
Corporate and bulk sales:
- Offer discounts on bulk gift card purchases
- Target HR departments for employee recognition
- Partner with local businesses for corporate gifting
Email Marketing Integration
Leverage gift cards and store credit in email campaigns:
- Abandoned cart: "Complete your order and get $10 store credit on your next purchase"
- Post-purchase: "Give the gift of [Brand] - gift cards available"
- Win-back: "Here's $15 store credit because we miss you"
- Balance reminders: "You have $47 in store credit waiting"
Measuring Success
Track these KPIs to optimize your programs:
Gift Card Metrics
- Gift card revenue: Total gift card sales
- Redemption rate: % of gift cards redeemed within 12 months
- Time to redemption: Average days between purchase and first use
- Overspend amount: Average additional spend when redeeming
- New customer acquisition: Gift card recipients who become repeat customers
Store Credit Metrics
- Credit issued vs redeemed: Track outstanding balances
- Refund diversion rate: % of returns choosing store credit over refunds
- Credit-driven return rate: How often credit recipients return
- Average credit order value: Spending when using credit vs normal orders
- Loyalty program ROI: Revenue from credit rewards vs cost of credit issued
Getting Started with Your Shopify Gift Card Program
Ready to implement gift cards and store credit? Here's your action plan:
- Enable gift cards: Set up digital gift cards with 4-5 denominations plus custom amounts in your Shopify admin
- Design templates: Create branded email templates for gift card delivery
- Configure store credit: Set up store credit refund workflows
- Choose apps: Select loyalty and store credit apps matching your needs
- Train team: Ensure customer service understands both programs
- Launch marketing: Promote gift cards across channels
- Monitor metrics: Track KPIs and optimize continuously
Gift cards and store credit aren't just payment methods. They're powerful retention and revenue tools that keep customers engaged with your brand. Merchants who implement strategic programs see higher customer lifetime values, reduced refund losses, and meaningful revenue from gift card sales alone.
Start with the basics, measure what matters, and expand your programs as you learn what resonates with your customers.
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