What Are E-Gift Cards and How Do They Work?

Questioning whether e-gift cards are right for your business? We’ll walk you through how they work and the benefits you can see from adding them to your offerings.

A great way to increase sales and promote your business is by adding e-gift cards to your offerings. While it may seem complicated, e-gift cards don’t have to be a hassle and can offer huge benefits when growing your business.

Below, we’ll break down what they are, how they differ from physical gift cards, and the benefits for using e-gift cards in your business. Read on to learn more!


What Are E-Gift Cards?

An e-gift card, or electronic gift card, is a digital code that is sent to the recipient via email, text, or through an app. This unique code can then be used to make purchases from a specific business, either online or in-person. 

Generally, the purchaser of an e-gift card can choose the amount of money that goes on it, but some merchants may choose to have pre-set amounts for sale as well. 

What’s the Difference Between E-Gift Cards and Physical Gift Cards?

The biggest difference between an e-gift card and a gift card is the card itself. For regular gift cards, you provide a recipient with a physical card, usually a plastic card with a magnetic strip, similar to a credit card. 

With e-gift cards, there is no card, only a redeemable code and sometimes a security PIN. This has the benefit of not needing to source and acquire physical cards, which can be an added expense and often a hassle to load up. 

How Can a Business Benefit From Using E-Gift Cards?

There are several ways you can benefit from using e-gift cards at your business. 

1. Reach New Customers

E-gifts cards are a great way for your business to reach a new set of customers. Existing customers that are excited and loyal to your brand may choose to buy gift cards for their friends who normally wouldn’t seek out your store or products. 

2. Upfront Profit

When someone purchases an e-gift card, you get the benefit of receiving that money upfront. While generally gift cards are later spent and that money made up, many times gift cards go unused, which means that you still gained the profit. 

3. Boost Sales

Not only do you get the upfront profit from selling the e-gift card in the first place, but many people view gift cards as free money, so they are often willing to spend beyond the gift card limit when using them. This can lead to additional sales beyond just the value of the gift card. 

4. Increase Customer Engagement

Some businesses offer e-gift cards as part of the larger reward system. For instance, if you have a points-based reward system, you may offer a $10 e-gift card for every 200 points earned. This helps incentivize customers to spend more and maintain brand loyalty. 

5. Compete with Bigger Businesses

Gift cards are an especially popular gift around the holiday season for their convenience and ease-of-use. While many people want to support small businesses, that often falls flat in the face of convenience for last-minute gifts for coworkers or acquaintances. By offering e-gift cards, you are more easily able to compete in that market. 

What Kinds of Businesses Can Offer E-Gift Cards?

Any business that sells products and services directly to customers can usually benefit from offering e-gift cards. However, certain businesses have better uptake rates for e-gift card purchases, including:

  • Ecommerce stores selling a range of consumer goods
  • Brick-and-mortar shops from clothing stores to pharmacies
  • Hospitality industries including restaurants, hotels, and travel transportation like airlines
  • Service-based businesses like nail salons, gyms, or massage parlors

The Benefits of Working with Pay.com as Your Payment Service Provider

Pay.com is a full payment service provider that makes accepting payments as a small business easy. Whether a customer is buying a product for themselves or a gift card for a friend’s birthday, Pay.com gives you a customizable checkout page that can be integrated straight into your site. 

With the highest level of PCI compliance and 3D Secure 2.0, you and your customers can rest assured that digital payments are safe and reliable. You can track all pending payments through your online Pay Dashboard and monitor any disputes, if they arise.

Pay.com makes it convenient for online small businesses to accept and track payments. Click here to get started now!

The Bottom Line: Are E-Gift Cards Right For You?

E-gift cards can be a great way for a small business to bring in new customers, build brand awareness, and compete with bigger businesses. Offering them to customers can help you increase your value to customers and grow your business. 

Pay.com can help get you set up with an integrated checkout page right on your website. With quick and simple onboarding, you can be ready to accept payments for all products and e-gift cards in no time at all. There are plenty of payment methods you can choose to accept, including all major credit cards, debit cards, and digital payments. 

Click here to create your account now.


How can my business accept credit card payments?

Pay.com makes it easy for your business to accept credit card payments through your website, send direct Pay Links, or even take credit card details over the phone. You can easily integrate Pay.com’s customizable checkout page into your webstore so your customers can easily and securely enter their credit card information for payment. 

Click here to get started with Pay.com now!

How do I start a digital gift card business?

You can start a digital gift card business like any other ecommerce shop, by sourcing gift cards to sell through an online platform. You can choose to partner with specific retailers who provide you with a deal on gift cards and then sell them at face value, for a profit. It benefits you and the retailers, who gain new business through gift card recipients.

Are gift cards profitable for businesses?

Yes! Gift cards are profitable for businesses because they are purchased just like any other product or service. Additionally, they can help bring in new customers who may turn into returning customers or spend more than the value of the gift card, which helps increase profit.

How do businesses make money on gift cards?

Businesses make money from gift cards from the initial purchase of the gift card. This means that whether or not the recipient ever spends the gift card, you’ve gotten the money either way. It can also help bring in new customers or reward loyal customers, which builds brand awareness and can help you increase sales over time.

Meet the author
Ashley Hague
Ashley Hague is a B2B writer based in New Zealand. Specializing in fintech, SaaS, and sustainability in business, she helps businesses achieve their goals. When not working, she can be found rock climbing or delving into a historical biography.
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