What Are Shopify Gift Cards and Store Credit and Why They Drive Revenue
Shopify gift cards are prepaid monetary value stored in a unique code that recipients can apply to purchases on your store — a digital or physical certificate that gives the holder the right to purchase up to the gift card value. Store credit is a similar mechanism but non-transferable — credit applied to a specific customer account, typically as a loyalty reward, refund alternative, or promotional incentive. Both mechanisms generate significant revenue value for Shopify merchants: gift cards are sold at full price (capturing immediate revenue before the purchase is made, and capturing revenue from gift-givers who might not have purchased otherwise); store credit motivates return purchases by tethering value to your specific store; and both reduce cash refunds by creating a retention mechanism that keeps money in your ecosystem rather than returning it to a customer’s bank account. Gift cards also generate a significant revenue windfall: industry data shows that 10-30% of gift card value is never redeemed (breakage) — revenue the store retains without delivering goods. And buyers who use gift cards as part of their payment often spend more than the gift card value, generating additional revenue from the “top-up” purchase. This guide covers how to set up, promote, and maximize revenue from Shopify gift cards and store credit programs.
Step 1: Enable and Configure Shopify Gift Cards
Shopify includes native gift card functionality available on all paid plans:
- Creating gift card products — in Shopify admin, navigate to Products → Gift cards → Add gift card. Configure the denominations you want to offer ($25, $50, $100, $150, $200, $250 are common denominations for most stores; add a custom amount option if your product prices vary widely). Gift cards are automatically marked as non-physical products (no shipping required). Shopify generates unique codes for each gift card purchased and delivers them to the buyer’s specified recipient email automatically — no manual code management needed.
- Gift card denominations strategy — offer a range of denominations anchored around your store’s average order value. If your AOV is $75, offering $50 and $100 denominations captures both the “small gift” and “full purchase” gift-giving contexts. A $250 “luxury” denomination serves gift-givers who want to cover a significant purchase. Custom amount options ($1-$500) increase conversion for buyers whose budget doesn’t align with fixed denominations but add slight cognitive friction; test whether custom amount increases or decreases your gift card AOV.
- Gift card expiry — Shopify allows you to set expiry dates on gift cards (1 year, 2 years, or never expire). Shopify’s default is no expiry. Many jurisdictions have laws against gift card expiry or fees (California prohibits expiry on gift cards over $10; federal CARD Act requires 5-year expiry minimum). Consult applicable law before setting expiry dates. “No expiry” is the most buyer-friendly and legally safest default for most US stores.
Step 2: Gift Cards as a Revenue Driver Beyond Simple Gifting
Gift cards serve multiple strategic revenue functions beyond the obvious holiday gifting use case:
- Refund-to-store-credit conversion — when a customer requests a refund, offer store credit at a slight premium instead of cash refund: “We can process a cash refund for $47, or we can offer you $52 in store credit plus free shipping on your next order.” A 10-15% premium on store credit converts a significant percentage of refund requests into store credit that retains revenue in your store and gives the dissatisfied customer genuine additional value. Customers who accept store credit are more likely to make another purchase (they have pending credit) and less likely to leave negative reviews (they feel positively compensated) than cash refund recipients.
- Gift cards as loyalty rewards — award gift card credit as milestone loyalty rewards: “You’ve spent $500 with us this year — here’s $25 in store credit as a thank-you.” Gift card rewards feel more valuable than equivalent discount codes because they’re unrestricted (no minimum purchase, no expiry pressure) and feel like real money rather than a conditional discount. Milestone-based store credit awards generate return visits from loyal customers who arrive with existing credit and typically spend beyond its value.
- Corporate and bulk gift card sales — companies purchase gift cards for employee recognition, customer gifts, and conference giveaways. Corporate buyers typically purchase in bulk ($500-5,000+) at a single transaction. Enable bulk gift card purchasing with a corporate inquiry form or dedicated landing page (“Corporate gifting — give your team the gift of [your product category]”); corporate gift card sales can represent significant revenue from a single account with minimal ongoing relationship management.
Step 3: Promote Gift Cards Strategically Throughout the Year
Gift card promotion timing dramatically affects revenue:
- Holiday and occasion-based promotion — Christmas, Valentine’s Day, Mother’s Day, Father’s Day, and graduation season are the highest gift-card-purchase windows; promote gift cards with dedicated campaigns starting 2-3 weeks before each occasion. Email campaigns, homepage placement, and social advertising targeted at gift-givers (not just product buyers) during these windows capture revenue from buyers who are specifically searching for gift options and would otherwise default to Amazon gift cards or generic alternatives.
- Last-minute gift promotion — digital gift cards are the perfect last-minute gift for buyers who’ve missed a shipping deadline. “Shipping cutoff has passed? Send a digital gift card instantly.” Promote this message aggressively in the 2-3 days before major gift occasions — this window captures high-intent buyers who are genuinely desperate for a last-minute solution and convert at extremely high rates from gift card-specific campaigns.
- Gift card as upsell at checkout — “Add a gift card to your order for a friend” upsell at checkout captures impulse gift card purchases from buyers who are already completing their own purchase and who may have a gift-giving occasion in mind. This placement adds incremental gift card revenue without requiring a separate purchase decision or marketing touchpoint. A simple “Do you know someone who’d love [store name]? Add a $50 gift card for $50” checkbox at checkout can add 2-5% to order values across all orders during promotional periods.
Step 4: Design Gift Cards That Drive Redemption and Repeat Purchase
Gift card design and recipient experience determines whether gift card recipients become loyal customers or one-time redeemers:
- Branded gift card email design — the email that delivers a digital gift card is often the recipient’s first brand touchpoint. Design it to communicate your brand clearly: include a header image that represents your brand’s visual identity; a personal message from the gift-giver (Shopify’s gift card email includes a message field that gift-givers can complete at purchase); the gift card code prominently displayed and easy to copy; clear instructions for how to redeem; and a “start shopping” CTA that links directly to your store. A well-designed gift card email generates brand enthusiasm before the first purchase.
- Redemption flow that creates account creation — when gift card recipients visit your store and add items to cart, encourage account creation as part of the redemption process: “Create an account to save your gift card balance and track your order.” Recipients who create accounts join your email list and loyalty program, converting from gift recipients to direct customers who you can market to on an ongoing basis.
- Follow-up after redemption — send a post-redemption email 7-10 days after the gift card is used: “Welcome to [Store Name] — how was your first purchase?” This welcome email for gift card recipients mirrors your standard new customer post-purchase sequence and begins building the customer relationship that converts first-time gift card redeemers into repeat buyers.
Step 5: Use Store Credit for Proactive Customer Service Recovery
Store credit as a customer service tool transforms negative experiences into retention opportunities:
- Proactive delay and issue credit — when a customer’s order is delayed, arrives damaged, or has any other fulfillment issue, proactively issue store credit before the customer contacts support: “Your order was delayed — here’s $15 in store credit as an apology.” Proactive compensation that arrives before the customer has had to complain generates significantly more goodwill than reactive compensation offered after a support interaction where the customer has already expressed frustration. The proactive credit says “we noticed and we care”; the reactive credit says “we only respond to complaints.”
- Goodwill credit for long-term customers — periodically issue small goodwill store credits to high-LTV customers with no specific occasion: “You’ve been shopping with us for 2 years — here’s $20 as a thank-you.” Unsolicited appreciation credits have outsized impact on loyalty because they’re unexpected and feel genuinely appreciative rather than transactional. These credits typically generate purchases 3-5x the credit value from customers who feel positively surprised and motivated to use their unexpected credit.
- Credit as win-back for lapsed customers — include a specific store credit amount (not a discount code — a real dollar amount credited to their account) in win-back campaigns for lapsed customers: “We’ve added $15 to your account — use it anytime on your next order.” Store credit win-back campaigns convert at higher rates than discount code win-back campaigns because the credit is unconditional (no minimum purchase required, no code to remember) and feels like received value rather than a promotional incentive.
Frequently Asked Questions
How do I send store credit to customers in Shopify?
Store credit methods in Shopify: 1) Native Shopify store credit (Shopify Markets / Shopify Balance): as of 2024, Shopify has been rolling out native store credit functionality accessible in Admin → Customers → [Customer] → Add store credit; this credits a specific dollar amount to the customer’s account automatically applied at their next checkout without requiring a code; availability depends on your Shopify plan and region; 2) Gift card as store credit: the most widely used method — issue a unique gift card to a specific email address using Shopify’s gift card functionality; the customer receives a code they apply at checkout; trackable and flexible; 3) Loyalty app store credit: LoyaltyLion, Smile.io, and Rise.ai all include store credit functionality as part of their loyalty platform — credit is awarded automatically based on configured rules and managed through the app dashboard; 4) Rise.ai specifically: Rise.ai (now acquired by Yotpo) specializes in gift card and store credit management; their platform supports automatic credit issuance for loyalty milestones, refund-to-credit conversion, and proactive service recovery credit — the most sophisticated store credit tool available on Shopify.
How do gift cards affect Shopify taxes and accounting?
Gift card tax and accounting considerations: 1) Gift card sale is not taxable revenue at point of sale — you receive prepaid value but haven’t delivered a product; recognize gift card sales as deferred revenue (liability) until the card is redeemed; 2) Gift card redemption is taxable at the point of purchase — when a customer uses a gift card to buy a product, the transaction is taxable as a normal product sale; the gift card payment method is simply the payment source; 3) Breakage revenue — unredeemed gift card value (breakage) is revenue recognized when redemption is no longer expected (typically after 2+ years of inactivity); consult your accountant on the appropriate recognition timing; some jurisdictions require unclaimed gift card funds to be escheated to the state after a defined period; 4) Shopify accounting: Shopify’s accounting reports treat gift card purchases as their own line item and track outstanding balances; export these reports for your accountant; QuickBooks and Xero integrations handle gift card accounting in most setups; 5) Gift cards are not subject to sales tax at point of sale in most US jurisdictions (the product purchased with the gift card is taxed, not the gift card itself); verify this for your specific jurisdiction.
Final Thoughts
Shopify gift cards and store credit — sold as gifts to extend your brand’s reach; awarded as loyalty rewards that motivate return purchases; offered as refund alternatives that retain revenue; and used proactively as customer service tools that convert complaints into loyalty — represent one of the highest-leverage revenue tools available to Shopify merchants. Every gift card sold is immediate revenue, potential breakage revenue, and an introduction of your brand to a new buyer (the recipient) who arrives with prepaid purchase motivation. Every store credit issued as a loyalty reward, service recovery credit, or win-back incentive drives return visits that typically generate purchase values well above the credit amount. Set up your gift card products today; promote them aggressively in the 4 weeks before every major gift occasion; and build store credit into your loyalty, refund, and customer service workflows. For more on Shopify revenue strategies, explore our guides on customer loyalty programs, customer retention programs, and referral marketing programs.
