Most Shopify merchants treat gift cards as a passive product: they add them to the store, wait for someone to buy one, and move on. That approach leaves real money on the table.

Gift cards are simultaneously a cash flow tool, a customer acquisition mechanism, and a retention lever. Merchants who actively promote them see measurable revenue impact, particularly around peak trading periods. The best part: gift cards are available on every Shopify plan at no extra cost.

Why are gift cards more valuable than they first appear?

At first glance, a gift card looks like deferred revenue. You receive payment now and fulfil it later. That framing significantly undersells what gift cards actually do for your business.

Breakage revenue. A meaningful percentage of gift cards are never fully redeemed: the recipient loses the code, forgets about it, or leaves a small unused balance. Industry data suggests average breakage rates of 10 to 19% in UK retail. On £100,000 in gift cards sold, that is £10,000 to £19,000 that may never be claimed as product. That figure flows directly to margin.

New customer acquisition. When someone buys a gift card for another person, they are introducing your store to a customer you did not acquire. That recipient, when they redeem, often spends beyond the card value. Shopify's internal research shows gift card recipients spend an average of 38% more than the face value of the card they received.

Upfront cash flow. You receive the full payment before dispatching any product. In peak season, when cash is tied up in stock, gift card revenue is particularly valuable for working capital.

How do you set up gift cards on Shopify?

Gift cards in Shopify are set up as a product type within your admin. They are available on all plans, including Basic.

Steps to create a gift card:

Go to Products in your Shopify admin
Click "Add product" then set the product type to "Gift card"
Set your denominations as product variants (£25, £50, £100, and £150 are the most common for UK merchants)
Upload a custom design image that matches your brand. This appears in the digital gift card email.
Set no expiry date. UK consumer protection law means you cannot set an expiry on a gift card, and Shopify's default is already set to no expiry.

After purchase, Shopify automatically sends the recipient a branded email containing their unique gift card code. The buyer can choose immediate delivery or a scheduled date (useful for birthdays and anniversaries).

Digital vs physical gift cards: which should you offer?

Digital gift cards are the default and require no additional infrastructure. They are delivered instantly by email, which makes them popular for last-minute gifting. For most online-only Shopify merchants, digital is sufficient.

Physical gift cards make sense if you have a bricks-and-mortar presence alongside your online store, or if your brand experience lends itself to premium packaging (high-end homeware, jewellery, gifting brands). They typically require a third-party service integrated with Shopify.

Giftup (from £29/month) and Hatch handle physical card printing and distribution and connect natively with Shopify. Both support branded card designs and allow online and in-store redemption.

How should you promote gift cards effectively?

Passive placement does not work. Gift cards need to be actively surfaced at the right moments.

Navigation and homepage placement

During peak gifting periods (Christmas, Valentine's Day, Mother's Day, Father's Day), feature your gift card prominently on the homepage with a dedicated banner or section. Add it to your main navigation under a "Gifts" or "Gift Cards" label.

Outside of peak periods, keep a persistent gift card link in the footer and in your header utility bar. This catches shoppers who arrive with gifting intent that is not tied to a specific occasion.

Product page "can't decide?" prompt

Add a "Not sure what to get? Buy a gift card" prompt on product pages. This captures indecisive shoppers, particularly in the weeks before major gifting dates. Some Shopify themes support a section block for this. Alternatively, a small app-based popup or section can be configured to appear on product pages.

Post-purchase email

After someone completes a purchase, they may be buying for someone else or have another recipient in mind. A post-purchase email or on-screen prompt that says "Buying for someone else too? A gift card is the perfect choice" is low effort and targets shoppers at the moment of highest intent and trust.

Email campaigns to existing customers

Segment your email list and send dedicated gift card campaigns to engaged customers in the 4 to 6 weeks before major gifting events. The most effective approach includes specific product examples alongside the gift card call to action, to help buyers visualise what the recipient might choose. A campaign like "Know someone who loves [your product category]? Give them the choice" converts well when it is personal and specific.

How do you use gift cards as a peak season strategy?

Peak season is when gift card revenue is most concentrated. In the six weeks before Christmas, gift card sales typically represent a higher proportion of total revenue than at any other time of year.

Prepare for the redemption wave. Gift cards purchased in November and December are typically redeemed in January and February. Plan your stock levels and promotion strategy around this. A well-stocked store with a January sale is an ideal landing point for gift card recipients.

Model gift card revenue separately in your cash flow. Gift card revenue lands immediately but creates a liability (outstanding redemptions) on your balance sheet. Your accountant should track the outstanding gift card balance as deferred revenue and move it to realised revenue as cards are redeemed.

Run a "Redeem your Christmas gift card" campaign in January. Email all active gift card holders in early January with a clear, welcoming message and a link to the store. This drives January revenue and introduces gift card recipients to your full product range at a time when intent to spend is high.

What are the B2B use cases for Shopify gift cards?

Gift cards are not only a consumer tool. Merchants in certain sectors can use them commercially.

Corporate gifting. If you sell products suited to workplace rewards, client gifts, or team incentives, approach local businesses directly. A straightforward B2B gift card offering (bulk denominations, invoice payment) requires minimal infrastructure and can generate a meaningful recurring revenue stream.

Staff rewards and incentives. Merchants who sell broadly appealing products (food, homeware, lifestyle) can position gift cards as an easy staff reward solution for HR and team leads.

Agency and reseller programmes. If your products are used within the work of agencies or consultants (specialist tools, professional supplies), gift cards can function as part of a referral or partnership programme.

How do you customise the gift card experience?

The default Shopify gift card email is functional but generic. Improving it is worth the effort.

Custom gift card design. Upload an image that reflects your brand. Use your brand colours, typography, and a simple, clean layout. The design appears in the recipient's email and sets the first impression of your store for a new customer.

Personalised email copy. Edit the gift card email template in Shopify admin (Settings, Notifications, Gift card created). Replace the default template with copy that sounds like your brand voice: warm, specific, and welcoming.

Gift card landing page. Create a dedicated product page for gift cards with strong copy that sells the gifting experience, not just the denomination. Include images that show the range and quality of what the recipient can choose from.

Redemption experience. Test the redemption flow as a customer. The code entry at checkout should be smooth and obvious. Any confusion at that point risks the recipient abandoning without spending.

Key actions to take now

Create gift card products in Shopify with at least three denominations (£25, £50, £100) and a custom branded design.
Add gift cards to your main navigation and make them visible on the homepage during the next major gifting event.
Edit your gift card email notification template so it reflects your brand voice and design.
Set up a post-purchase email or on-screen prompt mentioning gift cards for customers buying around gifting occasions.
Build a dedicated email campaign for your next gifting peak. Write the copy at least three weeks before the event.
If you have lapsed customers, test a win-back campaign using a small gift card value (£10 to £15) and track redemption rate against a benchmark of 8 to 15%.

Frequently Asked Questions

Are gift cards free to set up on Shopify? Yes. Shopify's gift card product type is available on every plan at no additional cost. Additional spend is only required if you choose a third-party app for physical cards, advanced delivery scheduling, or multi-brand functionality.

Can customers use a gift card alongside a discount code on Shopify? By default, yes. Shopify allows a customer to apply both a gift card and a discount code in the same transaction. This is useful for promotions: for example, allowing gift card recipients to use a sale discount on top of their card balance.

How do I track gift card redemptions in Shopify? Go to Analytics in your Shopify admin and access the "Gift cards" report. It shows issued cards, redeemed amounts, and outstanding balances. The Finance reports also show your total gift card liability, which is the value of all issued but unredeemed cards sitting on your balance sheet.

What denominations should I offer? Research from the gift card industry indicates that £50 is the most commonly purchased denomination in UK retail, followed by £25 and £100. Offering all three gives buyers flexibility. A £25 entry point reduces the barrier for budget-conscious gifters, while £100 and above captures premium purchases.

Shopify Gift Cards: How to Set Them Up and Use Them to Drive Revenue