Gift card values and validity – what your business should know
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 cash.
Thanks to the end of geo-blocking in the EU, since 2018, consumers can order gift cards from sites in other EU countries than their own. However, gift cards can have territorial limitations. So, for example, if someone buys a gift card on Kipling French site, they can only spend it on that site or in its French shops, unless stated otherwise. If this is the case, you must clearly inform your customers that they will not be able to exchange the gift card for a gift card for any other region.
In the EU, there is no uniform approach to expiration of gift vouchers, so the vendor can typically set the validity period. However, a 2020 EU decision confirmed that the validity period for gift cards is considered material information that must be communicated to consumers.
EU Member States do have their own specific regulations on validity of gift cards and vouchers. Minimum expiration dates range from no duration in Italy to 30 years in Austria (when no validity is set by the vendor).
After expiration, the card holder does not usually have the right to get a refund or extend the card duration. Vendors can stipulate this in their terms and conditions. One exception is Denmark, where gift cards may be refunded for a year following the expiry date.
Increasingly the EU can’t be looked at as a single territory for the purposes of gift card regulation, so one should expect different levels of rules in EU Member States.
In conclusion, gift card rules vary by country and different provisions can be set by the issuer, depending on the topic. However, value, territorial limitations and validity will always be considered material information for the consumer and should be clearly shared prior to purchase. For more information on how Logan & Partners can help you with terms and conditions or legal review of your gift card strategy, please contact Isadora Werneck and schedule a free 20-minute consultation.