How To Implement A Gift Card Program For Small Business: What You Need To Know & How To Get Started
Gift cards have long moved past being a simple craze or gimmick. They have become a hugely effective way to increase profits and, in some cases, are a nearly essential option for businesses to offer. (Take it from someone whose son requested gift cards last Christmas and, when asked to be more specific, replied, “I don’t care from where. I just like gift cards.”)
This is why virtually any point of sale company that’s worth its salt either offers gift card functionality or integrates seamlessly with a gift card company. It is a low-cost (or sometimes no-cost) way for businesses to bump sales, increase brand awareness, and encourage repeat business. But if you’re a small business owner who’s already putting in 80 hours a week just trying to keep your head above water, the thought of adding gift card functionality might seem complicated or time-consuming. In this post, we’ll try and assuage some of those fears and explain the different types of gift cards available and how you might go about offering that feature to your customers.
Learn More About Our Top Picks
| Company | Summary | Next Steps |
|---|---|---|
 | Best for small retail & QSR that sell in-store (not online) | |
 | Best for any small business that wants digital or traditional gift cards | |
 | Best for small businesses that sell online and in-store | |
 | Best for restaurants & bars that want traditional gift cards | |
 | Best for small businesses that want to sell eGift cards from their POS |
Other Featured Options:
- Lightspeed POS: Best for retailers or restaurants that want traditional gift cards
- Toast POS: Best for restaurants and bars that want digital & physical gift cards
Read more below to learn why we chose these options.
The Benefits Of Offering Gift Cards
First, let’s briefly talk about the benefits of adding gift cards to your small business.
- Branding: In this day and age, anything that gets your name or your logo out to the public is a plus for your business. You can sell your merchandise and send customers out the door with personalized shopping bags, and your own unique gift card can have the same effect.
- Spending Boosts: Studies have shown that the majority of gift cards users spend more than the total on their card. According to First Data’s 18th Annual Prepaid Consumer Insights Study, US consumers paying with gift cards spend an average of $59 more than the value of their gift card, up from $21 in 2017. The confidence of knowing that at least part of their purchase is already covered can potentially spur the customer to buy more than he or she had originally intended. On top of that, gift cards have already been purchased, so if it goes unused or there is a small balance left on the card, you still get that profit.
- Repeat Business: Once you’ve set up gift cards, it makes it easy to run marketing or promotions to attract new customers or garner repeat business. Having someone who purchases a gift card and gives it to a friend or family member who may not have previously been inclined to visit your store is a big bonus. However, you can also tack on promotions that, for example, give the purchaser a small gift card as a bonus for purchasing a gift card of a certain amount. You can also provide an additional credit good for a customer’s next purchase once they’ve used their gift card.
- Ease: Setting up or purchasing gift cards is generally a straightforward process whether you’re going directly through your POS system or a processing company. It can be as quick and painless as clicking a few buttons to activate electronic gift cards, or you can order physical cards, providing your design and company name. If you don’t currently have gift card functionality, chances are customers have asked about it at some point. For minimal time and money, it’s nice to have that option available.
The 3 Types Of Gift Cards You Can Offer Customers
So now, let’s give you a few examples of the types of gift cards you can purchase to see what might be the best fit for your business.
1. Electronic Gift Cards
In many respects, this is the easiest way to utilize gift card functionality. Electronic/digital/”eGift” cards give customers the ability to purchase gift cards online, which can be sent to a friend or used by the customer on your website or in your store. Square offers one of the better electronic gift card platforms at no extra cost, aside from its flat processing fee (Square also sells physical gift cards). Some electronic gift cards may just have a numerical code that you can redeem from your terminal, like a regular credit card transaction. Other programs may have a regular barcode or a QR code (2D barcode) that your business’s POS system can scan from the customer’s phone or printout. You lose some of the benefits of branding by not having physical cards in your storefront, but you can’t beat the convenience — or the affordability. While eGift cards have no production cost, traditional gift cards cost about $1 apiece to produce.
2. Barcode Gift Cards
If you want to set up physical gift cards, you will likely have one of two options. If you get gift cards with barcodes, it will act as a unique account for the customer that uses it. You can store and search a customer’s information via their account. When the gift card’s balance hits zero, there is usually the option to reload it. Of course, you will need a barcode scanner to look up gift cards. Barcodes tend to be popular for membership or customer loyalty cards, in part because they are quicker to scan and don’t require as much data security. Barcodes can also be scanned from a phone or printed piece of paper in the case of eGift cards that use barcodes. QR codes are a type of barcode that requires a 2D barcode scanner or a smartphone/iPad/tablet to read.
3. Magnetic-Stripe Gift Cards
The other option for physical cards is to have magnetic stripes. In fact, more often than not, physical gift cards use magnetic stripes, as they have superior data security compared to barcodes. These reloadable cards swipe through your credit card terminal the same as any debit or credit card, and the amount gets automatically deducted from the customer’s account information stored on the stripe. The only issue with magnetic stripes is that if the card is stored for a long time in a wallet or purse, the stripe can eventually wear out, and it can be difficult to look up the customer’s information in your system. Nevertheless, magnetic-stripe gift cards are the easiest and most secure way for most brick-and-mortar businesses to accept physical gift cards.
What About Gift Certificates?
Some businesses still sell gift certificates, but that’s not as commonplace as it was in the ’80s and ’90s, before credit card usage was as prevalent as it is now. Fun fact: Blockbuster invented the gift card in 1994 due to people counterfeiting their gift certificates. In addition to the counterfeit risk, gift certificates also aren’t reusable or reloadable, which can make it less likely that the customer will spend more at your business than whatever the certificate entitles them to. And being made of paper, certificates are far less durable than gift cards and more difficult to track and manage credit for if the customer doesn’t spend the entire balance.
However, gift certificates can still be advantageous, especially for certain business types. Generally, gift certificates are more effective for services rather than for monetary amounts. For example, a spa business might sell gift certificates entitling the recipient to a free massage, or a salon might sell certificates for a free haircut. If you have a service-based business, it can be beneficial to sell gift certificates to introduce new customers to your services, and, of course, to make money by selling the certificates themselves, as health and beauty services are popular gifts. A gift certificate for a free spa day can make for a more personal and desirable gift as opposed to a gift card with money on it.
Of course, you can also sell gift cards in addition to gift certificates, perhaps selling gift certificates only for select products or services rather than cash value.
Gift certificates are also less costly to produce than gift cards so that could also be a consideration.
4 Ways You Can Implement A Gift Card Program For Your Small Business
Now that you’re aware of some of the benefits of a gift card program for your business, as well as some available options, let’s briefly talk about how to add them to your offerings. If you are just starting out or in the market for a new point of sale system, or if you’ve been up and running for a while and want to implement gift cards now, you can usually find out what a company offers either on its website or with a quick phone call.
Offer Gift Cards Through Your POS
If you want gift cards, the first step is to talk to your existing POS company/payment processor. If they can’t do gift cards, look for alternatives.
Offering gift cards through your POS is the easiest way to do it, and it ensures that your gift card program works with your POS. A POS with an in-house gift card program makes things easier in terms of payment processing as well as reporting. You can easily track both gift card sales and redemptions and generally see how well your gift card program is going. However, if your POS integrates seamlessly with a third-party gift card software program, this can sometimes work just as well (more on third-party integrations in a moment). If your POS does not offer gift card functionality at all, you may want to consider upgrading to a modern cloud POS system that does.
If your POS does offer a gift card program, make sure to check if it’s an additional add-on. For example, some companies, such as Square, offer gift cards for free on all accounts — you only have to pay for the cost to produce the cards themselves. A company such as Toast, which has built-in gift cards, charges an extra monthly fee on accounts with gift card functionality.
Use An Integrated Third-Party Gift Card Company
You can also shop around and select your own gift card company directly if you have specific or unique needs that your POS system’s gift card functionality doesn’t provide. But if you plan on using these cards in concert with your POS, make sure that they’re compatible first. Some companies have a system in place where, if you already have a gift card provider from a third party, you can seamlessly transfer your information into their program.
POS companies may integrate with one or a handful of companies that specialize in gift cards. Again, you will want to see if these integrations are free or come with a fee. The easiest way to set up gift cards with a third-party integration is still to go directly through your POS system to make sure that it syncs up seamlessly.
Use A Standalone Third-Party Gift Card Company
In some cases, a company may use a standalone gift card company because they use a very basic POS that doesn’t have any gift card integrations, the price is too high, etc. If the gift card company you want to use does not work with your POS, you will need to use a workaround to process gift card transactions separately from regular transactions. In some cases, you may be able to use a company that will build a custom software integration that connects your POS software to another business software (Zapier is one example). Or if your POS has an open API, you may be able to pay a developer to create an integration for you.
Use An eGift Card App
A digital-only gift card option can be an easier, greener way that your business offers gift cards, without spending too much on plastic or even integrating your POS if you don’t want to. With some eGift card services, you simply sell eGift cards online, download an app to your mobile device, and use your mobile device or a scanner to scan the customer’s QR code from their phone or printout. Or the gift card may be emailed to the recipient in the form of a numerical redemption code. Some eGift card programs generate 16-digit codes that you can key into your terminal and process as a regular Mastercard transaction, for example, eliminating the need to integrate your POS with gift card software.
Web-based gift card apps allow you to sell eGift cards online, including on social media and your company website. However, most eGift cards can be redeemed both online and in your store. Companies that sell eGift cards may charge a small monthly fee or charge a percentage-based fee for each gift card sold.
Giftfly, GiftUp, Yiftee, and Givex are some examples of eGift card companies/apps for SMB. As mentioned, many cloud POS providers offer digital gift card options too.
The Best 7 POS Systems & Payment Processors With Gift Card Programs
In this section, I’d like to introduce you to some of our favorite POS systems that feature gift card support, either natively or via third-party integration. If you use one of these systems already, then using your POS to offer gift cards is probably an obvious choice. If you’re evaluating different systems to offer gift cards, you might consider switching to one of these top SMB POS systems, as they are all great overall point of sale systems, in addition to their gift card functionality.
1. ShopKeep
ShopKeep POS
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- Cost To Accept Gift Cards: Included in monthly POS software fee, call for a quote
- Cost Per Card: About $0.60 to $1.00, depending on quantity and customization options
- In-House Or Third-Party App: In-house
- Customizable With Your Own Artwork: Yes
- Digital Or Physical Cards: Physical only
- Redemption Method: Magnetic stripe, or manually enter the card number
- Redeemable Online Or In-Store: In-store only
ShopKeep is a highly-rated yet affordable iPad POS for quick-serve and retail SMB that also works on Clover hardware. ShopKeep has built-in support for gift cards included with your POS account, depending on your pricing package. Once gift card support is activated on your ShopKeep account, it’s super easy to create and order your own reloadable magnetic-stripe gift cards through the ShopKeep Store, which you can then activate and redeem from your register.
To track your gift cards, ShopKeep has a Gift Card Reporting Portal where you can view sale and redemption totals by location, see the history of a single card, and generate other reports on gift card usage. Issuing, redeeming, and tracking gift cards is intuitive and straightforward, and setting up gift cards with ShopKeep only takes a couple of minutes.
Because Shopkeep doesn’t have eGift card support, it’s best for single- and multi-location retail or QSR businesses that sell in-person rather than online. ShopKeep does integrate with BigCommerce, which can sync your online store’s inventory with your ShopKeep inventory. However, customers can’t use ShopKeep gift cards to pay for online purchases or use BigCommerce eGift cards at your brick-and-mortar store.
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2. Square
Square
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- Cost To Accept Gift Cards: Free on all Square accounts
- Cost Per Card: $0.80 to $2.00, depending on quantity and customization options
- In-House Or Third-Party App: In-house
- Customizable With Your Own Artwork: Yes
- Digital Or Physical Cards: Digital and physical
- Redemption Method: Swipe or manual number entry. With eGift cards, enter the card number or the customer’s email address
- Redeemable Online Or In-Store: Online and in-store
Square is a top mobile POS solution for small businesses in both the restaurant and retail industries, with its low cost and ease of use being big draws. Square’s gift card program is similarly affordable and transparent, making it easy to order your gift cards with a few clicks from the Square app on your mobile device or your account’s online dashboard. Square’s physical gift cards are reloadable and have a magnetic stripe, similar to ShopKeep’s.
As mentioned, it is free to accept gift cards and to sell both digital and physical gift cards on Square; you only pay for the cost of each physical card you produce. You also pay Square’s standard online processing fee of 2.9% + $0.30 when a customer buys a digital card, which they can do in your online store or from your Square POS.
Gift cards also show up in your Square reporting; the gift card sales report provides an in-depth look at all gift cards issued and their outstanding balances.
If you’re looking for an affordable POS with gift card functionality, and/or a POS that supports eGift cards, Square is hard to beat for all the value it offers in a simple, easy-to-use package. It’s all very straightforward, but if you have any questions, Square has a lot of resources on its website about its integrated gift card program.
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3. Shopify POS
Shopify POS
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- Cost To Accept Gift Cards: Included in the $79/month POS package and higher
- Cost Per Card: $0.30 to $1.49, depending on quantity
- In-House Or Third-Party App: In-house
- Customizable With Your Own Artwork: Yes
- Digital Or Physical Cards: Digital and physical
- Redemption Method: QR code scan (requires 2D barcode scanner or iPad camera) or manual number entry
- Redeemable Online Or In-Store: Online and in-store
Shopify POS is a flexible, scalable retail system that lies at the intersection of eCommerce and iPad POS. Whether you sell mostly online, in-store, or both, Shopify has options for you. Similar to Square’s gift card program, Shopify’s gift cards can be purchased and redeemed either at your POS or in your online store. You can create physical cards and/or digital eGift cards, both of which use QR codes. Additionally, customers can redeem Shopify gift cards on your other online channels that use the Shopify checkout, such as Facebook and Pinterest. You can also issue a free gift card with a set value to an existing customer as a reward or promotional incentive.
As long as you are on the “Shopify” ($79/month) or higher pricing tier, you can activate gift cards on your account at no added charge and order them through Shopify. You’ll only have to pay for each physical card you produce, and for any eCards you sell, you’ll just pay Shopify’s standard processing fee (fees vary depending on which package you have).
Perhaps the only drawback of Shopify’s gift card program is that its gift cards cannot be reloaded.
Shopify is designed for retail, but with the right integrations, it can also be used in other settings, such as salons or coffee carts. With its seamless eStore and POS integration, Shopify is an ideal choice for any small business that sells online as well as in-store.
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4. Upserve POS
Upserve POS
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- Cost To Accept Gift Cards: Available as an add-on (call for a quote)
- Cost Per Card: $0.19 to $0.79 depending on quantity
- In-House Or Third-Party App: In-house and third-party
- Customizable With Your Own Artwork: Yes
- Digital Or Physical Cards: Physical only from Upserve Gift Cards, digital also available via 3p integrations
- Redemption Method: Swipe or manual number entry (other options available via integrations)
- Redeemable Online Or In-Store: In-store only from Upserve Gift Cards, online redemption available via 3p integrations
Upserve (formerly Breadcrumb) is a comprehensive POS system for restaurants that’s available on both Android and iPad. Upserve is cloud-based with mobile options, such as tableside ordering tablets, making it a thoroughly modern POS solution for full-service restaurants, quick-serve, bars, cafes, and other eateries. Upserve offers both native gift card support through Upserve Gift Cards and third-party gift card integrations, including The Customer Connection (TCC), Swipeit, Opticard, and Paytronix.
If you want to use Upserve Gift Cards, simply activate gift cards on your account and order your cards online and sell/redeem them at your restaurants, then generate reports on gift card usage from your online portal. These are traditional (physical) gift cards with a magnetic stripe, though customers can also look up their card balance online using a QR code on the back of the card. Upserve Gift Cards are available as an add-on to your Upserve POS package; you will have to call them for a quote.
Upserve is a gift-card-friendly POS option for any bar or restaurant set up, particularly if you want a few different options for how you can accept gift cards.
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5. Clover
Clover Station POS
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- Cost To Accept Gift Cards: Free with the Clover Gift Cards app
- Cost Per Card: $1.00 to $1.25 per card, depending on quantity
- In-House Or Third-Party App: In-house and third-party
- Customizable With Your Own Artwork: Yes
- Digital Or Physical Cards: Digital and physical
- Redemption Method: Swipe physical cards, scan QR code on digital cards (or manual number lookup; other options available via integrations)
- Redeemable Online Or In-Store: In-store only for Clover Gift Cards, online redemption available via 3p apps
Clover POS uses its own custom-built iPad-esque hardware. This cloud POS is highly flexible in terms of all the apps you can use to customize its capabilities. Clover also offers traditional magnetic stripe and electronic gift cards and makes converting to Clover Gift Cards from another gift card app a simple process. The ability to accept eGift cards at your POS by scanning customers’ smartphones is also a nice perk. The Gift Cards app is free to download from the Clover App Market. You only have to pay the cost to produce the physical cards and a flat 2.5% processing fee when you sell a gift card (digital or physical). Additionally, Clover integrates with various third-party gift card apps, including Loopz, GiftFly, LoyLap, Factor4, and others.
Curiously, Clover gift cards, including eGift cards, can only be purchased and redeemed in-store, not online. However, some of Clover’s third-party gift card app integrations include online redemption options.
Clover is a beautifully simple yet flexible POS system for restaurants, retail stores, and service-based businesses, such as salons and gyms. It’s also a good option if you want to sell and redeem digital gift cards from your POS (rather than online). Many different companies offer Clover — we recommend going to Clover.com directly or using Dharma Merchant Services, Payment Depot, or National Processing. Please also note that while the Clover Station, Clover Flex, and Clover Mini can all accept gift cards, the Clover Go mobile POS device does not support gift cards.
Get Started with Clover Station POS
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6. Lightspeed
Lightspeed POS
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- Cost To Accept Gift Cards: Free with a Lightspeed subscription
- Cost Per Card: Depends on the card producer
- In-House Or Third-Party App: In-house and third-party
- Customizable With Your Own Artwork: Yes
- Digital Or Physical Cards: Physical only
- Redemption Method: Barcode scan or manual number entry
- Redeemable Online Or In-Store: In-store only
Lightspeed, a company that offers both a Retail and Restaurant version of its POS system, is a fast, cloud-based POS that can be used on an iPad, or in the case of Lightspeed Retail, on a desktop computer setup within a browser. You can also accept gift cards on Lightspeed POS at no added charge. You must purchase the cards on your own and activate them, but you can create custom cards to your specifications and, once you have activated the strips or bar codes, it’s easy to sell them on their own, accept them as payment, or check balances.
You can use any third-party gift card producer, as long as they meet Lightspeed’s specifications, which use a regular barcode (Plastic Printers is its preferred vendor). You can also accept gift cards in Lightspeed Retail or Restaurant using integrations such as TapMango and LoyalAction.
Lightspeed is a very basic and straightforward option, as it does not include any digital options. Lightspeed does have an online product called Lightspeed eCom, but it does not support gift cards. Nonetheless, both Lightspeed Restaurant and Retail are top-tier POS systems, and its gift card program is perfect if you only need physical gift cards at your establishment. Lightspeed also gives you the flexibility to choose your card producer.
Get Started with Lightspeed POS
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7. Toast
Toast POS
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- Cost To Accept Gift Cards: $50/month add-on to Toast POS
- Cost Per Card: $0.30 to $1.00, depending on quantity and customization options
- In-House Or Third-Party App: In-house and third-party
- Customizable With Your Own Artwork: Yes
- Digital Or Physical Cards: Physical and digital
- Redemption Method: Swipe, QR code, or manual number entry (physical cards have magstripe and QR code, eCards have QR code and number)
- Redeemable Online Or In-Store: In-store only
Toast is an Android POS custom-built specifically for restaurants. It’s arguably even more robust than Upserve and ultimately a bit pricier, but if you’re deciding between the two systems, you’ll have to take a close look at both to decide which one is better for your bar or restaurant. As far as gift cards go, Toast offers both digital and physical gift cards as a $50/month add-on. This means that on top of Toast’s $69+ monthly POS service charge, you’ll be paying at least $129/month for your restaurant POS. However, you may be able to save money if you use one of Toast’s third-party gift card integrations, which include PayTronix, Punchh, Smart Transaction Systems, SwipeIt, and TCC.
Toast makes it easy to sell and accept digital gift cards from your POS, which is not something a lot of restaurant POS systems can say. However, Toast gift cards cannot be redeemed online. This means that if your restaurant uses the online ordering and delivery add-on, customers won’t be able to use their Toast gift cards to order from your website — which is not ideal. Customers can purchase digital and physical gift cards through your online ordering page, though. In any case, Toast is a top-rated restaurant POS and an excellent choice if you want a full-service restaurant POS with a digital gift card program and third-party options.
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10 Considerations Before You Launch A Gift Card Program
Here are some crucial things to think about before you decide to implement a gift card program at your small business:
- Can you accept gift cards using your current POS software and equipment?
- What gift card programs does your POS offer (in-house or via third-party integrations), and what are the associated costs?
- Does any of the other business software you currently use offer gift card functionality?
- Is it important that your POS integrates with your gift card program (for sales reporting, ease of use, equipment considerations, etc.)?
- If your POS doesn’t can’t accept gift cards, would you consider upgrading to one that does?
- Does your business have an online presence — either for eCommerce or promotion?
- Are you willing to pay a monthly fee to include gift card functionality? If so, how much?
- Do you want to sell physical gift cards, digital gift cards, or both?
- Do you want to use gift cards to drive loyalty or promotions (for example, issuing free gift cards for promotions)?
- How many cards will you need — and what is your budget to produce them?
There are so many options for accepting gift cards at your business, but if you weigh all of the above considerations, you should be well on your way to figuring out what kind of gift card program you need.
Should I Accept Gift Cards For My Small Business?
With businesses around the country doing upwards of $160 billion a year in gift card sales, it’s indisputable that this is an extremely popular and profitable venture. And you don’t have to be a massive retailer or restaurateur to reap the benefits. As you can see, setting up gift cards is a pretty simple process that gives you the freedom to choose the best option for your own company while expanding your brand. And it can all be done at a minimal expense.
If you haven’t taken advantage of this functionality yet, it might be time to do some research or simply contact your point of sale provider to see what your options are. In some cases, it’s as simple as a few button clicks to get you up and running.
A Last Look At Our Top Picks
- ShopKeep POS
Summary - Best for small retail & QSR that sell in-store (not online) - Square
Summary - Best for any small business that wants digital or traditional gift cards - Shopify POS
Summary - Best for small businesses that sell online and in-store - Upserve POS
Summary - Best for restaurants & bars that want traditional gift cards - Clover Station POS
Summary - Best for small businesses that want to sell eGift cards from their POS - Lightspeed POS
Summary - Best for retailers or restaurants that want traditional gift cards - Toast POS
Summary - Best for restaurants and bars that want digital & physical gift cards
Matt Sherman
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