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holiday trends, retail, Education, ecommerce, gift cards

Gift cards as a revenue line rather than an afterthought

By: Moneris Team
November 13, 2026 clock Calculating time...
Gift cards as a revenue line rather than an afterthought Hero Image

How a small business in Canada can run gift cards as a planned source of sales, covering program setup, profit, breakage, redemption timing and provincial rules.

Key takeaways

  1. Gift cards pay off when they're managed like any stocked product, with a sales target, promotion across the year and monthly reporting.
  2. The value sits in early cash, spending above the card's balance and first-time visitors, while unredeemed balances play a much smaller part.
  3. A card sale is a liability until it's redeemed, and provincial rules on expiry dates and fees decide how long that liability stays on your books.

Gift cards earn their keep when you run them as a planned revenue line with its own targets, timing and reporting.

For many small businesses, offering a gift card starts as a simple favour to a customer who asks in December, usually fulfilled with a stack of paper certificates kept in a drawer. Close to half of shoppers in Canada, 47 per cent, planned to buy gift cards for the 2025 holiday season, up from 42 per cent a year earlier. People are already looking for them, so what matters is how well your shop is set up to sell them.

A gift card program for small business does three jobs at once. It brings cash in before you hand over any stock, it sends a new customer through your door on someone else's recommendation and it gives you a second visit to make a good impression. That takes a decision about who sells the cards, when you promote them and how you track what's outstanding.

What makes a gift card program worth running year round

A gift card program is worth running year-round because people give gifts in every month, and a card sold in May pays you in May. Birthdays, weddings, teacher gifts, staff rewards and thank-yous all happen outside December. A shop that only stocks cards for the holidays misses most of those occasions.

Picture a neighbourhood bakery on an ordinary Thursday. A customer picking up a cake for a retirement party adds a $25 card for the guest of honour. That's one sale that became two, and the second one introduces a person who might never have walked in otherwise.

How a gift card program works for a small retailer

A gift card program loads a prepaid balance onto a physical or digital card, records that balance in a central system and draws it down each time the holder pays. The recipient redeems it like any other form of payment, in one visit or several.

Take a bookstore selling a $50 card. The cashier activates it at the terminal, the buyer pays by debit card and the system now shows $50 owed to the cardholder. With a provider such as Moneris, the gift card program sits alongside the payment setup you already use, so staff sell and redeem cards at the same point of sale where they take every other payment. Balances update on their own, which removes the handwritten ledger.

Where the profit in gift card sales really comes from

Gift card sales are profitable mainly because of what happens around the card. You collect cash before the goods leave the shelf, recipients often spend more than the card's value and many of them are first-time customers.
 
Unredeemed balances play a much smaller part than most owners expect.

 

A clothing boutique sees this every January. A recipient arrives with a $50 card, chooses a $68 sweater and pays the $18 difference without much thought, because the first $50 felt free. The boutique earned a full-price sale in a slow month from someone who didn't choose the store on their own.

When gift cards are an afterthought

When gift cards are a revenue line

Cards appear at the counter for a few weeks in December.

Cards are on display and promoted for gift occasions across the year.

Staff mention them only when a customer asks first.

Staff suggest a card whenever a shopper is buying for someone else.

Balances live on paper or in one person's memory.

Every balance is recorded in one system that any employee can check.

Card sales are booked as income on the day of purchase.

Outstanding balances are tracked as money owed until they are redeemed.

Nobody knows how many cards came back or what recipients spent.

Redemption reports show return timing and the extra spend above card value.

How breakage and redemption timing affect your books

Breakage is the portion of gift card balances that's never redeemed, and redemption timing is how long sold cards take to come back. Both matter because a gift card sale isn't revenue on the day you make it. It's a liability you owe the cardholder until they spend it.

Say a café sells $4,000 in cards during December. That $4,000 lands in the bank right away but the sales it represents show up over the following months as people redeem. GST/HST is collected when the card is used to buy something, and the card sale itself isn't taxed. Ask your bookkeeper to record outstanding balances as a liability.

Holiday cards often come back in January and February, so the quiet season is when you'll need popular items on the shelf. Counting on breakage as income is a weak plan, particularly where cards can't expire.

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What provincial rules say about gift card expiry dates

Provincial consumer protection rules decide if your gift cards can expire or carry fees, and most provinces restrict both. Ontario bans expiry dates on most retail gift cards and prohibits activation fees and dormancy fees that reduce a card's value over time. Rules differ by province, so check the ones where you sell.

Consider a spa in Ottawa that sells a $100 card good for any treatment. That balance stays valid indefinitely, and the spa can't chip away at it with a monthly charge. Ontario does allow an expiry date on a card issued for one specific service, such as a single 60-minute massage. Cards issued for charitable purposes can carry one too.

The practical effect is that your liability doesn't quietly disappear after a year. A card sold in 2026 could come back in 2030, and your system has to honour it. Print terms on the card or its carrier that match the rules in your province.

Gift card ideas that suit the holiday season rush

The best holiday gift card ideas make the card easy to notice, easy to buy and easy to give. Shoppers picking up a last-minute present want a quick answer, so placement, packaging and a clear offer do more than a discount.

Average planned holiday spending on gift cards in Canada rose 10 per cent in 2025 from the year before, so the interest is there for shops that are ready for it. A hardware store that wants a share of that spending could put these five ideas to work in November.

  • Display cards at the till in a gift-ready sleeve so they read as a present.
  • Offer digital cards on your website for shoppers buying late on December 24.
  • Add a small bonus card to larger purchases to bring buyers back in January.
  • Sell bundles to local employers for staff gifts well before year-end parties.
  • Train staff to suggest a card when a customer can't settle on a size or colour.

Cost out the bonus card carefully. It's a discount on a future sale, so confirm how your province treats promotional cards before you print an end date.

How to set up a gift card program in Canada

Setting up a gift card program in Canada takes four decisions. Choose a provider whose cards work with your terminals and your online store, pick physical cards or digital cards or both, set your denominations and write terms that follow provincial rules.

A garden centre with one location and a web shop is a useful test. Its owner wants a card bought online to work at the till. That only happens when in-store and ecommerce sales read from the same balance, so integration is the first thing to ask a provider about. Reporting on cards sold, cards redeemed and balances outstanding is the second.

Pricing deserves a direct question as well. Ask about card production, per-transaction costs and monthly fees up front. Compare them against the sales you expect in your first year.

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What treating gift cards as a revenue line looks like

Treating gift cards as a revenue line means giving them the same attention as any product you stock. You set a sales target, promote them through the year, record balances as a liability and review redemptions each month.

The owners who do well with cards aren't running anything elaborate. They've put the display where people queue, they've taught the newest hire how to activate one and they review the numbers after each season. Small habits like those add up over a few years, because each card is a paid introduction to someone new.

It's fair to start modestly. Pick one occasion beyond the holidays, perhaps Mother's Day. Promote cards for it properly and see what comes back and when. If you'd like cards to run through the same system as the rest of your payments, Moneris offers gift card programs for businesses of every size, with support in English and French when you have questions.
 
A drawer of paper certificates can't tell you much about your customers. A program you manage can.

FAQs

  • Keep online and in-store inventory aligned and hold back a small buffer on fast sellers. Send pickup notices only after orders are bagged. Give staff written rules for verification, refunds and mismatched orders. Publish your holiday cutoff time and limit last-minute pickup to items physically in the store.

  • Yes. Gift cards can give a small business upfront cash while introducing new customers to the brand and encouraging repeat visits. They can also create additional sales when recipients spend more than the value of their card. Treating gift cards as a year-round product can help you capture birthdays, celebrations and other gifting occasions beyond the holidays.

  • A gift card program lets a retailer load a prepaid balance onto a physical or digital card and track that balance as customers redeem it. The card can be used for one purchase or across multiple visits until the balance is spent. Businesses can consider how their gift card program fits alongside their existing POS system and payment setup.

  • Make gift cards easy to see, buy and give during the holiday rush. Display physical cards near the checkout in gift-ready packaging, offer digital gift cards for last-minute shoppers and promote cards when customers are unsure about size, colour or preferences. Retail businesses can also promote gift cards for birthdays and other gifting occasions throughout the year.

  • Gift cards can support profitability in several ways. Your business receives cash up front, recipients may spend beyond the card's value and gift cards can bring in customers who haven't purchased from you before. Rather than relying on unredeemed balances, focus on the additional purchases and customer relationships a gift card program can help generate.

  • Start by choosing a gift card program that works with your payment setup and, if needed, your online store. Consider how it fits with your POS system, then decide whether you'll offer physical cards, digital cards or both. Choose your denominations and establish terms that follow the consumer protection requirements where you sell.

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Moneris Team

Moneris Team

Moneris is a leading provider of payment processing solutions in Canada. Our blog is your go-to resource for insights into the ever-evolving world of payments. We cover everything from the latest industry trends and technologies to practical advice for businesses of all sizes. Our blog's mission is to spotlight small businesses and provide resources that help them succeed in today's economy. Blog articles are written by members of Moneris' in-house marketing team with support from internal product and industry experts.

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