e-gift cards

How Do E-Gift Cards Work? An In-Depth Guide



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PassKit e-gift card example

Gift cards have become an increasingly popular choice among gift-givers, and research indicates that the global gift card market will reach a value of $1.4 trillion by 2026. The growing popularity of digital gift cards is partly responsible for this significant expansion.

According to a recent survey, the adoption rate of e-gift cards among businesses will also increase by 23% by 2025. E-gift cards are popular among consumers because of their convenience and accessibility, which explains why more and more companies are offering them to their customers.

To follow this trend, you can create and distribute digital gift cards with customer loyalty software like PassKit. 

Our platform helps you create and deliver digital membership cards, loyalty customer cards, coupons and e-gift cards your customers can store in mobile wallets such as Apple and Google Wallet and use whenever at your store.

Start your 45-day free trial to evaluate all features.

However, if you need more information, you’re at the right place. In this article, we’ll discuss how e-gift cards work, why they are essential for your business success and how PassKit can power your digital gift card program.

What are e-gift cards?

E-gift cards, or digital gift cards, are electronic versions of traditional gift cards. Customers can purchase and receive these cards through digital channels such as text messages and emails.

The e-gift card contains a unique code or barcode you can scan during checkout to determine the card’s value. Your customers can use the value on the e-gift card to purchase your products online through your website or mobile app or in-store by presenting the code to the cashier. 

It allows your customers to make purchases quickly without needing physical currency or a paper or plastic gift card.

One of the significant advantages of digital gift cards is their convenience, especially for contactless shopping. Compared to physical gift cards, customers can store e-gift cards on smartphones and are less likely to forget or lose them.

The Q1 2022 Gift Card Gauge revealed that 80% of consumers planned to buy a gift card, with 16% confirming they would purchase more e-gift cards than in previous years. 

These findings emphasize the importance of offering e-gift cards since they are becoming increasingly popular among consumers.

We highly recommend that you introduce electronic gift cards to cater to the changing demands of your customers and stay competitive in the market.

Why are e-gift cards important for small businesses?

digital e-gift cards

Image source: Freepik

Customers can struggle to select the perfect present for a special occasion. 

They frequently evaluate various products or services before making their decision. In such situations, digital gift cards might be an excellent option for online buyers to save time and effort.

E-gift cards, however, also offer lots of advantages to small businesses. Let’s talk about the most significant ones.

Increased revenue

E-gift cards offer customers an alternative way to pay for products or services. 

Whether customers visit your store or website, the unique code on the e-gift card lets them use the funds to buy your products. They may purchase additional items they hadn’t originally intended to buy, leading to increased sales. 

Another advantage of e-gift cards is that customers can buy e-gift cards for friends and family, expanding your consumer base and potentially increasing sales.

Customers are after gift cards for milestone events. In 2022, they were most likely to buy them for

  • Birthdays (57%)
  • Graduation (37%)
  • Winter holidays (33%)

Draw them closer to your company by giving them what they need at the right time.

Improved customer loyalty

E-gift cards can be an effective tool for increasing customer loyalty in various ways. When customers receive an e-gift card, it can incentivize them to repeat purchases. 

If the initial purchase experience was positive and the customer enjoyed your products or services, the e-gift card can be an extra nudge to return and make another purchase. 

E-gift cards provide a personalized touch that can make customers feel appreciated and valued. 

Offering customized messages or designs on e-gift cards can create a stronger emotional connection between the customer and your business, making them more likely to return. 

Finally, when customers receive e-gift cards, they may share their positive experiences with friends and family, leading to new customers and increased loyalty among existing customers. 

Attracting new customers

By purchasing an e-gift card, an existing client can introduce a potential new customer to your business who may not be familiar with your brand. 

The e-gift card encourages the receiver to learn more about your goods or services and may bring in new customers. It might be a helpful strategy for growing your customer base.

Additionally, you can easily share and distribute e-gift cards, allowing for word-of-mouth marketing and raising brand awareness.

Enhanced customer experience

With e-gift cards, customers can determine how to use their gift card balance. They can buy single or multiple products and shop online or in person at your store. 

This flexibility allows customers to tailor their shopping experience to their preferences, making it a more personalized and satisfying experience.

Aside from minimizing clutter and making it more straightforward for customers to monitor their transactions, e-gift cards also eliminate the need for physical gift cards or paper receipts. 

Customer can keep their virtual card ready on their smartphones, increasing convenience and accessibility.

Lower production costs

The physical card has higher production costs. You have to print and distribute it to all your venues. However, the electronic version is much more cost-effective.

With PassKit, for instance, you can create and launch your e-gift card program in a few minutes without any custom app building. You also don’t need any design and coding skills. Not to mention there are no printing or distribution costs.

We ensure your e-gift card design meets the Apple and Google Wallet standards and help you bring the card to your customer’s phone using a multichannel distribution system.

Start your free trial to see how PassKit works.

Competitive advantage

Businesses are continuously competing for consumer attention. You should provide as many perks as possible to draw customers in, such as virtual gifting. 

Making it easier for customers to communicate and interact with your company through mobile devices might give you a competitive edge on the market.


An e-gift card is more sustainable than a paper or plastic card. 

Distributing a physical copy of the card generates waste if discarded or lost. By offering a digital gift card, you can reduce your environmental impact.

But that’s not all. Let’s now discuss how an eGift card differs from a traditional card.

How an e-gift card differs from a physical gift card

e-gift card vs traditional card

Image source: Examples

An e-gift card is a better choice than its traditional counterpart. Here’s why.

The difference in delivery and fulfillment

Delivery refers to transferring ownership of the gift card from the buyer to the recipient. In the case of eGift cards, you can do this electronically, often through email or SMS

The recipient receives a code or number which they can redeem for the gift card’s value. This process is much faster and more convenient than traditional gift cards, which require physical packaging and shipping.

Fulfillment refers to providing the recipient with the gift card value. For eGift cards, you can do this electronically through online platforms or point-of-sale systems. 

For traditional gift cards, the fulfillment process involves printing, packaging, and shipping the actual card to the recipient.

Advanced customization and design options

Most digital gift cards typically provide extensive customization and design options that let buyers personalize the card to their needs. 

These options include using pre-made design templates, uploading a logo, adding a personalized message, or even including a photo on the card. 

It allows the buyer to create a unique and personalized gift tailored to the recipient.

In contrast, physical gift cards generally have fewer design options available. Custom designs or logos are often used in bulk or corporate orders and may not be available for individual purchases. 

As a result, digital gift cards offer greater flexibility and creativity for buyers looking to give a personalized gift.

Advanced security features to prevent fraud

If a paper gift card is stolen or lost, the recipient cannot utilize it, and someone who found or stole the card can potentially use the gift card balance.

E-gift cards offer enhanced security features that help prevent fraud and reduce theft risk. They have a unique encryption code, making accessing the gift card more difficult for anyone other than the intended recipient.

It provides greater peace of mind for both the gift giver and the receiver.

Comprehensive tracking and reporting

When you launch an eGift card program, you can track the usage of gift cards and analyze customer behavior. 

It includes gaining insight into how consumers interact with the program, what they purchase with the funds on the gift card, and where and when they are making these purchases. It helps you improve marketing and sales strategies.

In contrast, once customers purchase a physical gift card and give it to the recipient, tracking its usage or collecting customer data is almost impossible.

Various redemption options

Customers can use physical gift cards only in person.

In contrast, eGift cards enable you to leverage digital transformation benefits. They offer more freedom and comprehensive redemption options, as customers can use them online or in-store using the e-gift card code. 

Depending on your policy, customers can use them for online purchases, in-store purchases, or a combination of both.

How do e-gift cards work?

how do e-gift cards work

Image source: Freepik

E-gift cards are simple to acquire and use. Here are the crucial steps.

Purchase process

Customers can purchase eGift cards online through a mobile app or website. They usually do the following:

  • Select the desired funds
  • Customize the card 
  • Enter the recipient’s information
  • Add their payment details to pay the card

After the payment, the system sends a confirmation email to the buyer while the recipient gets notified about the gift card. 

Redemption process

Recipients have several redemption options. They can utilize their digital card online or in person by using a number or scanning a QR code. 

Your employees at a cash register must know how to work with the card.

Personalization options

Your e-gift card program can showcase your brand’s visual identity. Include elements that differentiate you from other businesses to promote your company. 

Alternatively, the buyer can personalize the card according to their needs. 

Balance checking

Customers can always keep track of their balance. They can do that:

  • Online
  • Through a mobile app
  • Using a mobile wallet like Google or Apple Wallet
  • In-store

It is a necessary step that helps customers make purchases with the remaining funds.

Expiration and refunds

It depends on your terms and conditions. Each small business can set an expiration date for a particular e-gift card. 

Usually, the recipient has two years to spend the money. After that date, the card becomes invalid.

Sometimes customers might return a product they purchased with a gift card. In that case, your employees should know how to refund the amount so that it reappears on the card and becomes available to the customer.

E-gift card management

You should use advanced software to manage your e-gift card program to ensure smooth operations. It should give you a bird’s eye overview of all critical activities combined with in-depth customer data.  

For instance, you should be able to:

  • View gift card balances
  • Issue new cards
  • Cancel expired ones
  • See redemption activity
  • Issue refunds if needed

PassKit, our loyalty program app, helps you create an efficient and successful eGift card program providing you with an online platform suitable for non-tech-savvy users. 

All you need to do is start your 45-day free trial and create your first e-gift card.

Let’s explain how PassKit works and what features it provides to help you boost your business.

What is PassKit?

PassKit examples of digital passes

PassKit is our SaaS platform that allows you to create, manage, distribute and monitor eGift cards. You can also make loyalty reward cards and digital passes, such as digital tickets.

As we offer an all-in-one platform, you don’t need a custom app to launch the program. You can quickly set up your program with PassKit and send e-gift cards to your customers’ mobile wallets.

With PassKit, you can leverage a multichannel distribution system to deliver your e-gift cards on various digital channels, promote your products or services and reach customers wherever they are. 

That creates a connected customer experience, unifying your online and offline channels.

Here’s how you can use PassKit for your e-gift cards.

How to design your e-gift card program

design e-gift program

One of the benefits of using a service like ours is that you don’t need design or development expertise to create an e-gift card program. 

Our Pass Designer allows you to easily create visually appealing e-gift cards that meet the design guidelines for Apple and Google Wallet. 

It means you don’t have to worry about the technical specifications or requirements for creating an e-gift card. Our loyalty card design works seamlessly with mobile wallets.

In addition to loyalty card templates, you can personalize your e-gift card by adding your small business logo, images, and text.  

You can align the card with your branding, include custom fields to collect customer data and add a barcode for card scanning. 

How to promote your e-gift card program

promote e-gift program

As we mentioned, multichannel distribution is another perk of using PassKit. This system allows you to expand your reach and win customers’ attention.

With PassKit, you can promote and distribute your e-gift cards on numerous channels using the following:

For instance, your website can feature an “Add to Wallet” button. After clicking the button, the customer will consider your e-gift card program and download your card or surprise their loved ones with a present.

How to scan e-gift cards

scan e-gift cards

You can scan e-gift cards with the PassKit PassReader app for iOS or Android

It allows you to view all information at the point of sale without integrating expensive scanning hardware. 

Once a customer opens their mobile wallet, you can scan the QR code and:

  • Check the gift card recipient
  • View the balance
  • Redeem the amount needed for a transaction
  • View the transaction history

That’s it. You can increase your customers’ happiness in minutes.

How to track e-gift card usage

e-gift cards analytics

PassKit offers an easy-to-use dashboard that tracks data regarding your e-gift card program. The insights help you understand how successful the program is with your customers. 

You can see the number of enrolled members, how many customers installed the card in their wallet or removed it and track the number of deleted users.

You can also track which mobile wallet is most popular and which distribution channel brings you the most customers.

You can even track and analyze the performance by day, month or year. Alternatively, you can look at custom dates to extract the needed data.

How to start with PassKit

PassKit e-gift cards

We have a simple answer to this question.

You can start a 45-day free trial to evaluate all features and see how PassKit works firsthand. After that, you can choose one of our flexible pricing options and calculate your monthly costs based on your projected volume.

E-gift card best practices to implement today

e-gift cards best practices

Image source: Freepik

We’ve prepared the best practices to ensure your e-gift cards are successful. Let’s share them below.

Securely store customer data

Keeping customer data safe and secure is paramount in today’s digital age. 

Make sure to introduce measures that protect sensitive data. Encrypt data with an SSL certificate or use payment tokenization.

Automate e-gift card delivery

Automation can save you time and minimize manual work. When a customer buys an e-gift card, the system should automatically send all information to the recepient. One action should trigger the other.

Establish e-gift card terms and conditions

Some people might abuse your e-gift card program if you don’t set terms and conditions. We suggest you define the following:

  • Expiration dates
  • A refund policy
  • Usage restrictions

That way, you can protect the program and customers from fraud.

Provide clear instructions on how to use and redeem e-gift cards

Your customers should receive clear instructions once they buy or receive the e-gift cards. The instructions should inform them where and how they can use the cards. If some stores don’t accept e-gift cards, mention that in the instructions.

Personalize e-gift card communications

Consumers are after a personalized customer experience. You can personalize the communication even for e-gift cards. For instance, you can use customer names when addressing them in emails or messages. 

Allow customers to check their balances

People like checking their balances before and after purchases. They need to know how much they can spend on the items. Offer an easy way for consumers to check their balances. For instance, they can do it on your website, mobile app or through a mobile wallet.

Send reminders and notifications when e-gift cards are near expiration

You can automate emails or text messages that inform customers that their e-gift cards are near expiration. That way, you give them a chance to use the remaining balance. It is also good marketing for your business. 

If you don’t send reminders, customers can feel frustrated and reconsider buying with you again.

Final thoughts on e-gift cards

E-gift cards are increasing in popularity. They have become the go-to solution for customers purchasing a present for a special occasion. Offering these cards allows you to expand your consumer base and get your products in front of more people.

As a small business, you can leverage e-gift cards. Whether you run a restaurant, coffee shop, gym or catering business, you can introduce them to drive sales and increase loyalty.

Don’t build a custom app to make things easier – use PassKit. Our cost-effective solution provides all the features you need to manage a successful e-gift card program. 

Leverage PassKit to track the performance, redeem cards, promote your program on various platforms and understand what your customers want.

Start your 45-day free trial.

FAQs about e-gift cards

Here are the answers to the questions people frequently ask about e-gift cards.

What is the difference between an eGift card and a digital gift card?

There is no difference. The terms are synonymous, and both refer to the online version of a physical gift card.

Can you use e-gift cards anywhere?

It depends on the terms and conditions. However, most businesses allow customers to use e-gift cards in their stores – be it online or brick-and-mortar.

Can you print out an eGift card?

Yes, you can. Once you receive the e-gift card, you can print it and show the code in stores.

Can I turn an eGift card into cash?

No, you can’t exchange an e-gift card for cash. You can only use the funds on it to purchase products at a specific store.

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