Payments
Gift cards for walk-in shops: the rules, the math and the setup
A gift card is prepaid value: you are paid when you sell it and you owe the service later. Done well it collects cash up front and sends you new customers. Done carelessly it leaves balances nobody can explain. Here is how a balance should work, the rules to decide first, a calculator for your own numbers and how NextUp Walk-in handles it.
Why shops sell gift cards
A gift card does three things for a walk-in shop. It collects money before the service is given. It sends someone new to your door, because the recipient was chosen by the buyer, not found by your advertising. And it sells itself at the moments people look for a gift: the holidays, birthdays, Mother’s Day and Father’s Day.
It also creates a promise. Until the card is spent, the shop owes the service, which is why accountants book the money as a liability and not as sales. Treat the sale as a deposit on future work, not income, and most of the other rules follow.
Cards suit a line as well as a booked calendar. Redeeming one needs no appointment: the recipient walks in, joins the line and pays the bill with the code.
How a balance should work
Whatever tool you use, a card needs the same few behaviors, and every one of them is a question to ask before you trust a system with your customers’ money.
- A value and a balance. The value is what was loaded; the balance is what is left.
- Partial use. A $50 card pays a $35 service and keeps $15 for next time.
- A history. Every use is listed on the card: when, where and how much.
- No double spend. Two team members cannot spend the same dollars at the same moment, and a retry after a bad connection does not charge the card twice.
- Money goes back. If a line comes off a bill, or a paid bill is refunded, the amount returns to the card.
- One report. Issued, redeemed and still owed, so the liability is a number and not a guess.
Rules to decide before the first sale
Write each of these down once so nobody at the counter has to guess. Rules on expiry, inactivity fees and cash back for small balances differ by state and by the kind of card, so check yours with your state’s consumer protection office or a local attorney. This post is not legal advice.
Gift card rules to decide, and how NextUp Walk-in handles each
| Expiry | None, or a long fixed term | Rules differ by state and card type; a short expiry can be unlawful | Optional, never sooner than five years after the sale; hidden for a location in California |
|---|---|---|---|
| Inactivity or service fees | None | Many places restrict them, and customers resent them | Never charged |
| Partial use | Allow it; the rest stays on the card | Customers expect it | Yes; every use is listed on the card |
| Card size | A floor such as $10 and a ceiling for large cards | Large cards raise the loss if a code is stolen | Sold on a bill from $1 to $1,000 |
| Lost or stolen codes | Treat a code like cash, or replace on request | A code works for whoever holds it | Search by recipient name or part of the code; a card with a balance cannot be switched off alone |
| Who may issue cards | Owner and managers only, or anyone at the counter | Issuing creates value without a sale | Owner, or a manager allowed to change prices; any signed-in team member can spend one |
| Bonus value | Face value only, or a bonus on top | A bonus is a discount you choose to give | Bonuses belong on store credit as promotional credit, tracked apart from paid value |
| Sales tax | On the card, or on the services when spent | Rules differ by state; ask your tax preparer | A card sold on a bill is untaxed; services bought with it are taxed on their own bill |
| Refunds on a card | No cash back, or cash for small balances | Some states ask for cash back on small balances | A refunded bill returns the money to the card; an owner or manager can move a balance to store credit |
| How the code is passed on | A printed card, a note, your own message | The buyer wants something to give | You pass the code on yourself; gift cards are never texted |
Laws differ by state and card type: check yours before you set a rule. The last column describes the product, not the law.
What a gift card program could bring in
Try your own numbers. The first result is cash you collect before any service is given. The chart shows the part owners tend to miss: what you owe on unused cards levels off at the cards you sell in a month times the months a card takes to be used. Past that point, every new card is matched by one being spent.
None of it is profit until the service is delivered, and a card that is never spent is not income to count on. The rules for unused balances differ by state, so ask before you book one.
What a gift card program could bring in
Type what you expect to sell. The result is arithmetic on your numbers: cash collected up front, what you still owe on unused cards, and how many new people the cards could send you.
- Collected up front, year one
- $6,000 120 cards
- Still owed at month 12
- $1,500 a liability, not income
- New people through the door
- 48 recipients new to you
- Spent beyond the cards
- $720 90 cards used in year one
Hover or tab to a column for the numbers.
| Owed on unused cards | |
|---|---|
| M1 | $500 |
| M2 | $1,000 |
| M3 | $1,500 |
| M4 | $1,500 |
| M5 | $1,500 |
| M6 | $1,500 |
| M7 | $1,500 |
| M8 | $1,500 |
| M9 | $1,500 |
| M10 | $1,500 |
| M11 | $1,500 |
| M12 | $1,500 |
Example arithmetic from your inputs: cards sold each month are spent after the delay you chose, so the amount owed levels off at monthly sales times that delay.
Assumes the same number of cards each month, all spent after the same delay and none lost. Before card processing fees. Cards that are never spent are not counted as income: the rules for unused balances differ by state.
Selling cards without discounting yourself
The simplest habit is to offer a card at checkout when someone is already pleased, and to put a small display by the register in the weeks before the holidays. Round amounts ($25, $50, $100) sell faster than custom ones and are easier to spend.
Keep a bonus separate from the card. If you want to add value for a buyer (“add $100, get $10 free”), that extra is a discount you are choosing to give, and it should be tracked apart from money the customer paid. That is how store credit works in NextUp Walk-in, with paid and promotional credit kept apart. See store credit instead of refunds.
If your best customers come every few weeks, a card may not be the right product. A membership or package rewards repeat visits directly: see memberships and packages for walk-in shops.
How NextUp Walk-in sells and redeems gift cards
Gift cards are part of Pro ($59 a month for the first location). The 14-day free trial includes every Pro feature. Everything below is what the product does today.
Selling. The owner, or a manager allowed to change prices, creates a card on the Gift Cards page: a balance, an optional recipient name and note, and a code that is generated or typed. At the counter, a “Sell a gift card” line goes on a bill (from $1 to $1,000, with no tax and no tip), the bill is paid like any other, and the card is made when it is paid. Gift cards are never texted: hand over the code yourself.
Redeeming. On the bill, choose Gift card, look up the code and use as much as the customer wants; pay the rest any other way. It works from the Staff Screen too, and on one person’s share of a split bill. Each use keeps who spent it, a retry never spends the card twice, and taking a line off the bill or refunding it puts the money back on the card.
Money and books. A card sold by card is a normal card payment on your own Stripe account. NextUp Walk-in’s card fee is 0.5% of card payments, never on tips, at most $1 a payment, on top of Stripe’s processing fee. No NextUp Walk-in fee is taken when a gift card pays a bill. In the books gift cards are a liability, the Accounting page has a gift card report, and a bill paid fully by gift card counts as “another way” in the close-out.
Guardrails. The product does not charge dormancy or service fees, will not let you set an expiry sooner than five years after the sale, and hides the expiry box for a location in California. They are a floor, not legal advice. An owner or manager can move part or all of a balance to store credit, and a card with a balance cannot be switched off by itself.
Where to read more
See gift cards, store credit, accounting reports, hair salons, barbershops, pricing.
Questions
Which plan has gift cards?
Gift cards are part of Pro. The 14-day free trial includes every Pro feature.
Can a customer use only part of a card?
Yes. The customer pays the rest any other way, and the balance stays on the card with every use listed.
Does NextUp Walk-in charge a fee when a gift card pays?
No. The card fee is not taken when a gift card pays a bill. A card you sell and take payment for by card pays the normal fee: NextUp Walk-in’s card fee is 0.5% of card payments, never on tips, at most $1 a payment, on top of Stripe’s processing fee.
Do gift cards expire?
Only if you set a date. The product will not accept one sooner than five years after the sale, and your state’s rules may be stricter, so check them first.