How virtual gift cards work

Whether you’re looking to instantaneously send someone a present or just want an easy way to pay for an online purchase, you may consider buying virtual gift cards.

Most retailers with an online presence offer them, serving as a convenient alternative to physical gift cards. They can save you the time and stress of traveling to a brick-and-mortar location simply to purchase a physical gift card. Plus, they enable you to send someone a gift from their favorite store even if there’s no storefront near you.

Not sure how it works? Check out our guide on how to send virtual gift cards and all the benefits you can expect.

Physical versus virtual gift cards

Gift cards can come in two forms: a physical card or piece of paper that you would hand to your intended recipient, or a virtual card that's ordered online and sent to the recipient via an email, text, or other digital format.

Both types of cards may come with an expiration date or associated fees for inactivity, so you’ll want to read the fine print before you load or reload them with any funds.

No matter what form you choose to buy, branded gift cards can either be open-loop meaning they are accepted by a range of merchants; or closed-loop, which means they are only accepted by the specific retailer that issued the card.

Physical gift cards

Physical gift cards exist in a tangible paper, plastic, or card format and usually have to be purchased in person from a brick-and-mortar store.

You can carry this type of gift card around in your wallet or purse just like cash and use it to pay for your purchases when you’re at the store or shopping online.

If you’re shopping on the merchant’s website, you will likely need to type in the code or PIN on the back of the card to redeem it.

Keep in mind that if there’s a balance left on the card after your purchase, you must keep the physical card with you in order to redeem the remaining funds later on. If you accidentally lose the card, there's no way to further redeem the money.

Digital gift cards

A virtual gift card is available as a digital link or code rather than something you can physically hold in your hand. You would usually purchase, send, or redeem a digital gift card online rather than at a store.

Potential benefits of virtual gift cards

Virtual gift cards come with a range of benefits, from convenience to ease of use. They can also help you stay on budget and avoid overspending. Here’s what you should know:

Easy purchasing

With virtual gift cards, it doesn’t matter where you or your intended recipient are located. For instance, if you want to buy your mother-in-law a gift card to a store she loves in her town, you may be able to buy it online and send it to her via email, even if the store doesn’t exist in your city.

Simple sending

Sending gift cards through email or text is simple and practically instantaneous. You don’t have to wait a certain number of business days for your friends or family to receive your gift. You also don’t have to worry about your virtual gift card getting lost or stolen on its way to the recipient.

Easy to use

Virtual gift cards can be redeemed anytime, anywhere from the comfort of the receiver’s home. And if there’s a remaining balance on it, you don’t have to worry about safeguarding the physical card. Simply keep the email on hand and reference it before your next purchase.

Having a set amount allocated on a virtual gift card can also help with budgeting. A virtual gift card can be used to avoid overspending and help users stay on track with their financial goals.

Next time you’re looking to give a gift to someone, you could consider sending a virtual gift card their way. They’re typically easy to use and quick to get, so if you need to skip the hassle of getting to a physical location, you could go for a virtual gift card.

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