Gift Card Values And Validity ' What Your Business Should Know

• Jurisdiction: European Union
• Law Firm: Logan & Partners
• Subject Matter: Consumer Protection, Consumer Law
• Author: Tracy Starr and Isadora Werneck
• Published date: 10 March 2023

If you've decided to offer gift cards on your website, you're not alone. The gift card industry in Europe was valued at $140.1 billion in 2021 and is expected to grow fourfold by 2032, a 12.4% compound annual growth rate (see more here).

Closed-loop gift cards, which are limited to purchasing good and services at the merchant listed on the card, are a terrific way to gain new business and increase sales. Open-loop gift cards offer even greater flexibility, as they can be used in a number of different businesses. Many of us have discovered a new site thanks to a thoughtful gift card. Not to mention that most of us tend to spend more than just the value of the gift card.

Irrespective of the gift card type, if you are going to offer gift cards on your online retail site, you need to communicate clear, consistent guidelines on the card's value and validity as required by EU legislation. These are usually set forth in the terms and conditions. Both seller and purchaser are bound by these terms and conditions at the time of purchase. We detail below some of our top tips in terms of gift card values and balance, territorial scope and expiration dates that you should consider before offering gift cards to customers.

Card values and balance

On your website, you should supply information on any conditions on the gift card usage, such as how it can be spent and how the buyer can verify remaining balances. You must also be transparent on the card value and expiration, and ensure that buyers have easy access to the general terms and conditions at all times.

In terms of the value of gift cards, the issuer can decide the maximum value. The EU does not regulate the limits for closed-loop cards; however, cards bought in cash over '10,000 requires due diligence to avoid fraud.

Typically, closed-loop cards are not redeemable for cash. In some cases, gift certificates or gift cards may include such an option, allowing the holder to exchange the card for its cash value. Cash redemption options should be clearly covered in the terms and conditions as noted above. In some countries there may be laws that require gift certificates or cards to be redeemable for...