Short answer: Shopify gift cards are quick to launch, but a good holiday program needs four decisions made up front: which card types you sell, what terms you attach given provincial gift card rules, how you account for unredeemed balances, and how you screen gift card orders for fraud. Make those calls before the first sale, not after the December rush.
Quick answer
- Offer digital cards online and physical cards in store if you use Shopify POS.
- Most provinces restrict expiry dates and fees on standard gift cards, with exceptions. Check each province you sell in.
- Gift card tax is generally applied at redemption, not at sale. Confirm with your accountant.
- Screen gift card orders for fraud, especially large, rushed, or repeat purchases.
01. Choosing the Right Gift Card Setup
Start with where your customers buy and where they will spend the card. The right mix depends on whether you sell online only, in store, or both.
| Option | Best for | Watch out for |
|---|---|---|
| Digital gift card | Online stores, last minute gifts | Email deliverability and fraud screening |
| Physical gift card (Shopify POS) | Retail locations and pop ups | Card stock, activation at the till, theft |
| Store credit | Returns and goodwill | Keep it separate from paid gift cards for accounting and rules |
| Third party gift card app | Advanced needs such as bonus rules or branded designs | Extra cost, data sharing, and a second system to reconcile |
Set denominations that match how people gift, such as $25, $50, $100, and a custom amount, and customize the delivery email so it looks like your brand and lets buyers schedule a send date. If you sell in person too, our guide to Shopify POS in Canada covers how one balance can be redeemed in both channels. Gift card features vary by plan, so confirm them in Shopify's current documentation.
Why it matters: A card that can be bought online and spent in store, with one balance, is worth more to the buyer and easier for you to account for.
02. Canadian Gift Card Rules: Expiry, Fees, and Disclosure
Gift card law in Canada is provincial. Many provinces restrict or ban expiry dates and certain fees on standard prepaid gift cards, and require clear disclosure of terms. Common exceptions include promotional cards, cards for a specific good or service, and cards issued for charitable purposes, but the details and the wording differ by province.
- Do not print an expiry date on a paid card unless you have confirmed it is allowed everywhere you sell.
- Avoid inactivity or dormancy fees on paid cards unless a province clearly permits them.
- Put your terms in plain language on the product page, in the delivery email, and on physical card packaging.
- Treat bonus and promotional cards as a separate product with their own written terms, and have a lawyer confirm the wording if you plan an expiry on them.
This is general information, not legal advice. If you sell across provinces, which most Shopify merchants do, the safest default is to follow the strictest rule you are subject to. Selling into the US adds state rules as well. See our guide to US sales tax and economic nexus for how cross-border selling widens your compliance footprint.
Why it matters: An expiry date that is perfectly legal in one province can be a complaint, or a fine, in another, and the customer will never know which rule applies to you.
03. Tax, Liability, and Accounting
A gift card sold is not revenue yet. It is a liability, a promise to deliver goods later. Tax is generally applied when the card is redeemed against taxable items, not when the card is sold, which is why GST, HST, and PST setup on the items being bought still matters.
- 1. Record sales as a liability. Have your bookkeeper set up a gift card liability account and reconcile it to Shopify's gift card reports each month.
- 2. Recognize revenue on redemption. Sync redemption data to your accounting system so revenue and tax land in the right period.
- 3. Track unredeemed balances. Some provinces have unclaimed property rules, so ask your accountant how to treat balances that never get used.
- 4. Separate promotional cards. Bonus cards are a marketing cost, not a paid liability. Tag them so they do not distort your numbers.
Why it matters: December gift card sales inflate cash and deflate profit in the same quarter, so unreconciled balances turn into a January surprise.
04. Preventing Gift Card Fraud
Gift cards are fast, digital, and hard to claw back, which makes them a favourite of fraudsters, especially in peak season when review teams are stretched.
- Review gift card orders flagged by Shopify's fraud analysis before the email goes out, or delay delivery on large orders until they clear.
- Watch for patterns: several high value cards to different recipients, a new account with a rush request, or repeated failed payments followed by a success.
- Protect customer accounts with strong sign-in, since a hijacked account with a gift card balance is easy to drain.
- Expect chargebacks on stolen card purchases. A card that has already been spent cannot be recovered, so the loss lands on you.
For a deeper look, read our guides on AI fraud detection and account takeover and chargeback prevention.
Why it matters: One successful fraud run can wipe out the margin from dozens of legitimate gift card sales.
05. Holiday Promotions That Bring Buyers Back
Gift cards pull new customers into your store, and most recipients spend more than the card is worth. Make that second visit count.
- Bonus offer: a small bonus card with a larger purchase, redeemable in January when traffic is slow.
- Last minute shoppers: promote digital cards with scheduled delivery in the final shipping week. Pair with your holiday shipping cutoffs.
- Follow up: send recipients a welcome email and an invitation to join your loyalty program, with consent that meets Canadian email rules.
- Remind holders of unspent balances later in the season with a friendly message, rather than relying on an expiry date.
Why it matters: The card is the first sale. The follow-up decides whether the recipient becomes a customer.
06. Key Takeaways
- Offer digital cards online and physical cards through Shopify POS so one balance works in both channels.
- Gift card law is provincial. Avoid expiry dates and fees on paid cards unless you have confirmed they are allowed everywhere you sell.
- Treat gift cards as a liability until redeemed, and reconcile balances to your books every month.
- Screen gift card orders for fraud, because spent cards cannot be recovered.
- Use bonus offers and follow-up emails to turn recipients into repeat customers.
07. Frequently Asked Questions
How do I set up gift cards on Shopify?
Shopify supports digital gift cards that are emailed to the recipient and, where you use Shopify POS, physical gift cards you sell in store. You enable and configure a gift card product in the Shopify admin, set the denominations you want to offer, and customize the notification email. Which gift card features are available depends on your Shopify plan, so confirm against Shopify's current documentation before you plan a promotion.
Do gift cards expire in Canada?
In most Canadian provinces, consumer protection law restricts or prohibits expiry dates and certain fees on standard prepaid gift cards, with exceptions for things like promotional cards and cards for a specific good or service. Rules differ by province and have exceptions, so check the current rules in each province where you sell, and treat this article as general information rather than legal advice.
Do I charge GST or HST when I sell a gift card?
Generally, a gift card is treated as a store of value and tax is applied when the card is redeemed for taxable goods, not when the card is sold. Treatment can vary by situation, so confirm with your accountant how to report gift card sales, redemptions, and any unredeemed balances.
Are gift cards a fraud risk for online stores?
Yes. Gift cards are attractive to fraudsters because they are easy to resell and hard to reverse once spent. Common patterns include stolen cards used to buy gift cards, account takeover followed by balance draining, and card testing. Use fraud analysis on gift card orders, review high value or rush orders, and add friction such as purchase limits where the pattern justifies it.
Should I run a gift card promotion, such as a bonus card?
Bonus offers, such as a $10 bonus card with a $50 purchase, can lift holiday sales and bring buyers back in January. Treat the bonus card as a promotional card with its own terms, because promotional cards are often treated differently from paid cards under provincial rules. Set clear terms in writing and confirm the rules for the provinces you sell in.
Can I sell Shopify gift cards for my B2B or wholesale business?
Gift cards are mainly a retail and DTC tool. Wholesale buyers more often use account credit, net payment terms, or prepayment, so a gift card is rarely the right instrument for a distributor relationship. Manufacturers with a consumer-facing storefront can still benefit from gift cards on that side of the business.
Related Resources
Sell and redeem gift cards across online and in-store channels
Turn gift card recipients into repeat customers
Reduce disputes on high risk holiday orders
Plan cutoffs and costs for the peak season
Want your holiday gift card program set up right?
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