How Gift Cards Work in Shopify¶
Before configuring GiftCard Hero, it helps to understand how Shopify handles gift cards natively. This article explains the underlying mechanics so you know what the app is building on.
What a Shopify gift card is¶
A Shopify gift card is a stored-value record in your store's database. It has:
- A unique code (typically 16 alphanumeric characters split into groups, e.g.
ABCD-EFGH-IJKL-MNOP) - A balance in your store's currency
- An optional expiry date
- A status (active, disabled, or fully redeemed)
- An optional association with a customer account
When a customer checks out with a gift card code, Shopify deducts the amount from the card's balance and records the transaction. If the order total exceeds the card balance, the customer pays the remainder with another payment method.
Shopify plan requirements¶
Gift cards are only available on Shopify, Advanced Shopify, and Shopify Plus plans. The Basic Shopify plan does not support gift cards.
If you're on Basic, you'll need to upgrade before using GiftCard Hero.
How gift cards are created in Shopify¶
There are two ways to create a gift card natively:
- Shopify Admin → Gift Cards → Issue gift card — manually create one for a specific amount and optionally assign it to a customer.
- A customer purchases a gift card product — when your store sells a gift card product, Shopify automatically generates a code and emails it to the buyer.
GiftCard Hero uses both mechanisms behind the scenes, and adds a third: bulk generation via the Shopify Admin API.
Gift cards as a payment method¶
Gift cards in Shopify are a payment method, not a discount. This is an important distinction:
| Gift cards | Discount codes |
|---|---|
| Reduce the order total as a payment | Reduce the price of items |
| Balance persists across orders | Single use |
| Appear in financial reports as liability | Appear as a discount |
| Can be combined with discounts | Cannot usually be combined with other discounts |
| Not taxed when purchased (in most regions) | N/A |
Taxes and accounting¶
In most jurisdictions, gift card purchases are not taxable — you're selling a future payment instrument, not a product. The tax is collected when the gift card is redeemed to buy taxable goods.
Shopify handles this automatically: gift card sales are recorded as a liability, and when redeemed, the liability is offset against the sale.
Important: Tax laws vary by country and state. Always consult your accountant for your specific situation. Some US states (e.g., California) have specific gift card regulations.
Expiry dates¶
Shopify allows you to set an expiry date on a gift card, but you must comply with local law:
- United States: Most states prohibit expiry dates shorter than 5 years. California, Florida, and others ban expiry dates entirely on gift cards under a certain value.
- European Union: No general EU-wide ban, but member states have their own rules.
- Canada: Gift cards cannot expire under federal law (with some exceptions).
- Australia: Gift cards must have at least a 3-year expiry under Australian Consumer Law.
GiftCard Hero lets you set expiry globally or per gift card type. The app does not enforce legal compliance automatically — you are responsible for setting appropriate expiry dates for your region.
What Shopify does NOT provide natively¶
| Feature | Native Shopify | With GiftCard Hero |
|---|---|---|
| Branded email with gift card code | Basic email only | Fully customizable |
| Recipient can personalize (message, design) | No | Yes |
| Physical gift card code management | No | Yes |
| Balance check widget on storefront | No | Yes |
| Bulk generation and sending | No | Yes |
| Analytics (redemption rate, sales lift) | Basic | Detailed |
| POS tools (balance check, issue, refund) | No | Yes |
| Unused balance reminders | No | Yes |
| Multi-store shared balances | No | Yes |
How GiftCard Hero fits in¶
GiftCard Hero is a layer on top of Shopify's gift card system. It uses the Shopify Admin API to:
- Create gift cards on your behalf when orders are placed or bulk jobs run
- Read card balances for the balance check widget and POS tools
- Update card balances during top-ups
- Pull transaction data for analytics
All gift cards created by GiftCard Hero appear in your Shopify Admin under Gift Cards — they are full Shopify gift cards.
Key limitations to be aware of¶
- Gift cards cannot be applied to orders with subscriptions in some configurations.
- Gift cards cannot be used to pay for other gift cards (Shopify restriction).
- One Shopify order can have up to 10 gift cards applied to it.
- Gift card codes are case-insensitive in Shopify's checkout.
- Shopify does not expose the full 16-character code via API after creation for security reasons — GiftCard Hero stores a masked version and the last 4 digits.