What is a gift card?

A gift card is a prepaid payment method that allows the recipient to make purchases up to the card's value at a specific retailer or group of retailers. After we’ve covered the gift card definition, let’s take a look at its main types.

Types of gift cards

Closed loop gift cards. Only redeemable at the issuing brand or retailer (e.g. a Nike gift card).
Open-loop gift cards. Created by banks or payment networks (such as Visa or Mastercard gift cards) and can be used at different merchants.
Digital gift cards. Sent and used electronically, often via email or mobile apps.
Physical gift cards. Standard plastic cards are used either in-store or online.

Benefits of offering gift cards

Boost revenue. It frequently results in increased order values as the clients use more than the card balance.
Drive loyalty. It encourages multiple purchases and recurring visits.
Gain new customers. Gift cards can bring in new visitors who later become loyal customers.
Simplify gifting. This will attract gift-givers who want a quick and flexible solution.

Best practices for using gift cards in ecommerce

Promote gift cards on homepages, through emails, and at seasonal events.
Use gift cards together with discounts or loyalty points to make them more attractive.
Highlight gift cards to help those who cannot make up their minds or those shopping on behalf of an organization.
Ensure gift cards are easy to find and purchase across all devices.
Allow personalization with special messages or themes of design.
Display gift card balance and usage history in the customer account dashboard.
Send automated reminders or follow-up emails to encourage someone to use the gift card.