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How Gift Cards work

Gift Certificates are a substitute for currency, which cannot be used as a legal tender and are often a form of prepayment at a particular business or a store.

Gift Cards are essentially the same as Gift Certificates except that the cards automate the checkout and accounting processes. Cards usually have a barcode or magnetic strip, which can be processed through a standard electronic POS terminal or credit card machine.

Cards do not have any value until they are sold, at which time the cashier enters the amount that the customer wishes to put on the card. This amount is not stored on the card, but is instead noted in the stores or credit/gift card processor's database and cross-linked to the card ID.

*Example of transactions.

Gift Card purchase

  • 1. A customer comes up to a cashier and asks to buy a Gift Card.

  • 2. The cashier enters the amount of the Gift Card into a POS terminal or credit card terminal, swipes the gift card for activation and selects an appropriate function key.

  • 3. The POS terminal or credit card terminal sends the command to the store's database over the internet to the credit/gift card processor's server to activate the card for the purchased value amount. The purchased value of the card is stored on a database at the store or a database that is located on the processor's site.

  • 4. If no problems are detected the processor sends a command back to the POS terminal or the credit card terminal that the transaction is approved and it is ready for payment.

  • 5. The customer pays cash or with a credit card for the purchase of the Gift Card.

Gift Card redemption

  • 1. A customer buys merchandise and presents a Gift Card as a payment.

  • 2. The cashier selects an appropriate function key at the credit card terminal or POS terminal and swipes the gift card.

  • 3. The credit card terminal or POS terminal sends the command to the store's database or over the internet to the credit/gift card processor's database to redeem the gift card.

  • 4. If no problems are detected the processor sends command back to the POS terminal or credit card terminal that the transaction is approved as payment. The value of the card is reduced at the database.

  • 5. If the value on the Gift Card is more then the amount of purchase then the POS terminal or credit card terminal will print the remaining balance on a receipt and completes the transaction.

  • 6. If the value on the Gift Card is less than the amount of purchase then the POS terminal or credit card terminal will prompt the balance due. The customer may pay the balance due with cash or a credit card.


If you are looking for Gift Cards, POS or Credit Card Terminals , or if you have additional questions on Gift Card Processors please contact us.

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