How do egift cards work?

Saturday, January 03, 2015

Electronic gift cards (egift cards) are gift cards that are delivered to the recipient online or over text and can be used to make purchases online and in store, even without a physical card or printed information. It is popular because of how easy it is for gift givers to buy gift cards and send them to friends and loved ones from the comfort of their home, and for recipients to use both online and, in many cases, in person. With the increasing popularity of mobile payments, egift cards are a new and seamless way to shop online and easily send gifts to others.

What is a digital or egift card?

An egift card is a fast and easy gift option that can be purchased and sent online. All of the following names are commonly used, but are referred to as the same type of payment:

  • Electronic gift card (egift card)
  • Virtual gift card
  • Online gift card
  • Mobile gift card

One person gives someone some funds via a gift card they can use online, and that virtual gift is sent through email, social media, or through an app or text, and then can be used for online purchases. Sometimes, egift cards can also be used in person.

How do they work and how are they different from physical gift cards?

Egift cards can be used online and sometimes in person at their respective retailers. Here, we’ll walk you through the process of purchasing and using egift cards both online and in person, and describe the differences between various types of egift cards as well as the difference between them and a physical gift card.

The process for using egift cards

  • An egift card is purchased through the shop and sent to the recipient.
    • Note that if you can’t find your egift card in your email inbox, check the spam and promotional folders before taking other steps to locate it.
  • Upon purchase, a confirmation email is sent to the purchaser of the digital gift card.
  • The egift card is received and activated by the recipient.
  • Activation can most commonly be done by calling an automated phone number and entering the card number and expiration date.
  • The code or numbers can be used in the store at checkout to pay.

Once a purchase is made, the owner of the card can select an option to “check balance“ of the card either through the retailer app or in the digital wallet.

An egift card can appear as:

  • a barcode
  • a series of digits (gift card number), or
  • another type of code

Codes can be copied and pasted or scanned into a discount code box in the checkout when shopping online. These can also sometimes be printed and used in-store, although this varies by store and card, so it is always useful to check with customer service or read the terms and conditions of the card prior to using it.

In cases where there is also a barcode present on the card, this can be scanned in-store at the checkout and used.

There are two types of gift cards:

  • Closed-loop
  • Open-loop

Closed-loop vs open-loop

A closed-loop gift card is one that is specific to the named store on the card. For example, an Amazon gift card can only be used to make purchases at Amazon. Gift cards with listed businesses can only be used for those businesses.

Open-loop gift cards are those that are specific to a credit card company; in other words, they are not specific to one retailer or another. An example of this is a Visa gift card, which acts as a credit card with a certain card amount on it which is able to be spent. This option is similar to debit cards due to the way that the card must have money on it (in the checking account) prior to any purchases being made. So, both types of cards are limited to the amount of money they have on them at any given time.

Prepaid card vs egift card

Some credit card companies also offer prepaid cards. These are different from egift cards because they can be reloaded and used continually, while gift cards have a set limit that a user can spend; and once that limit is reached, the gift card is spent.

Ultimately, an egift card differs from a physical gift card in the way that it is purchased, delivered, and later stored by the recipient.

What are the benefits?

There are many benefits to both giving and receiving egift cards. Here we’ll cover the main benefits and aspects that make egift cards a great option for gift giving.

Fast, convenient, user-friendly

The most significant benefit is the convenience, flexibility, and ease that these gift cards can be purchased and used, and part of that is the way they can be saved and kept track of on the recipient’s phone.

Store in digital wallets

Egift cards are a convenient way to give a gift due to the way they can be stored in a digital wallet on the recipient’s smartphone. All types of smartphones have some version of a wallet that can be used to store personal payment information, travel or event tickets, coupons, and more. Apple Pay, Google Pay, and Samsung Pay are all useful options. When an egift card is received, it can be uploaded to the wallet; therefore, the recipient doesn’t have to worry about misplacing the card or forgetting they have money but not using it.

Easily checking the balance

No more wasting any extra cash! The balance on egift cards is easy to check thanks to apps, wallets, and other ways of checking the balance where it is stored. While physical gift cards are often lost or forgotten after one use, an egift card will stay on the user’s phone.

A modern, simple way to pay

Egift cards offer a modern way to gift others. Thanks to the ease of purchasing, sending, receiving, and using them, they make a popular option for last-minute gifts and special occasions.


Are you ready to implement egift cards at your business?

Heartland is ready to help.

Heartland helps nearly 1,000,000 entrepreneurs make and move money, manage employees and engage customers with human-centered technology solutions that allow them to rise above the daily grind and lead their businesses into a brighter future. Learn more at heartland.us.