Shopify gift cards: setup, redemption and the rules behind them

1 Set up gift cards in Shopify

Gift cards are available on all Shopify plans. You sell them as a product with fixed amounts, called denominations. Or you issue a single card from your admin, for example to make up for a problem with an order. Shopify limits those cards to $2,000 or the equivalent.

Once the order is fulfilled, the buyer or the recipient gets an email with a unique code. Printed cards are sold in person through Shopify POS; an order in your online store always creates a digital card. Here's how to create a gift card product:

1. In your Shopify admin, go to Products > Gift cards.
2. Click Add a gift card product and enter a title, description and image.
3. Set the denominations, for example $25, $50 and $100. According to Shopify, each can be up to $10,000 or the equivalent.
4. Save the product. Shoppers can't enter a custom amount in your store; for that, create a draft order and issue the card yourself once it's paid.

2 Redeeming at checkout: what works and what doesn't

The customer enters the card's code at checkout. If your store was created on or after May 12, 2025, that has a cost: Shopify charges your plan's third-party transaction fee on the part paid with a gift card, even with Shopify Payments. The rates are in the guide What is Shopify Payments?.

When a card is redeemed, according to Shopify:

• Several cards can be used on one order.
• Discount codes work too: a gift card and a discount code can be used together.
• The whole total: the balance pays for the order including shipping and taxes. If it isn't enough, the customer picks a second payment method for the rest.
• Leftover balance stays on the card for later orders.
• Exceptions: a gift card can't buy another gift card or pay recurring subscription charges, and it only works in the store that issued it.

3 Gift card or discount code: payment or price cut

A gift card is money that has already been paid. The buyer gave you the amount, and you owe goods for it. A discount code is a price cut: nobody paid anything, you give up part of the price.

Your books see the same difference. A discount lowers the revenue of the order. A gift card you've sold is a liability until it's redeemed, money you still owe goods for. Ask your accountant how to book it.

Sales tax shows it too. In Washington, for example, the taxable sale happens when the card is redeemed, and the card's value counts toward the taxable price. Check your state's rule. On an $80 order in such a state:

• With a $10 discount code the customer pays $70 for the goods, and sales tax is charged on $70.
• With a $10 gift card the card covers $10 of the price, and sales tax is charged on the full $80.

4 US rules for gift cards and gift certificates

Shopify calls them gift cards. The federal rules in Regulation E, which go back to the Credit CARD Act of 2009, distinguish gift certificates, which can't be reloaded, from store gift cards, which can. Both are covered.

Shopify sets gift cards to never expire by default. If you turn expiration on under Settings > Payments, Shopify suggests five years. States can add protections on top of the federal rules, according to the CFPB, so check where you sell. This isn't legal advice.

The main points of the federal rule for a store:

• At least five years: the money on a card can't expire earlier than five years after the card was issued or last loaded.
• Inactivity fees: only after a year without use, at most one per month, and disclosed on the card.
• Different rules: loyalty, award and promotional cards, such as a card you give away in a campaign, are treated differently.

5 When a discount code is the better choice

A gift card fits when someone wants to give value: the customer who buys it, or you when you make up for a mistake. For marketing it's often the wrong tool. A $10 gift card you hand out works like cash across your store, on shipping, taxes and sale items too.

A discount code can be limited in Shopify: to certain products, a minimum order value, one use per customer and an end date. And it lowers the price instead of being money you owe. For cards in the parcel, the code in your welcome email or partner promotions it's usually the better choice.

If you need many codes that each work only once, one campaign with many codes is simpler than dozens of separate discounts.