Digital marketing

Selling gift cards: Five things you need to know

- September 23, 2014 2 MIN READ

Do you sell or offer gift cards, vouchers or certificates on your website or through your business? Read this article, you may need a license.

You may be surprised to know that if you sell gift cards, vouchers or certificates (all known as ‘gift cards’), that if you don’t meet the Australian Securities and Investments Commission (ASIC) exemptions, you might need a financial services license to offer them. 

Gift cards are generally considered ‘non-cash payment facilities’ and are regulated by ASIC. For example, if you provide a means for a customer to make a payment for goods or services using payments other than Australian or foreign currency, it acts like a credit card, and this would be caught by the legislation, which means you need a license. 

The downsides of obtaining a license 

  • You have to complete a series of difficult exams
  • It’s a long, drawn out process
  • It’s expensive 

How your business can avoid triggering licensing requirements 

To avoid obtaining a license, you must include the following in your Gift Card terms. 

  1. Gift cards cannot be ‘reloaded’.

    This means you cannot offer gift cards which enable customers to add value or increase the value of their certificate amount. Otherwise they may be considered as a credit card, triggering credit facility law which requires licensing.

  2. Gift cards cannot be redeemed for cash.

    This means you cannot offer cards which permit customers to use the gift card to buy items and receive the remaining balance in a cash payment. If there is a very small amount remaining on the gift card, the business owner can decide at their discretion to redeem it in cash if it cannot be ‘conveniently used’. 

  3. Want more articles like this? Check out the business marketing section.

  4. Consumers must be made aware of any ‘critical terms’.

    Remember, the person purchasing the gift card is often not the person using the gift certificate, so both must be made aware of any important terms of use. This includes things such as expiry dates, restrictions on items that can be purchased with the certificate, and all other limitations. 

  5. Set a ‘reasonable’ expiry date.

    Any expiry of less than 12 months may not be seen as reasonable in some cases. If there is no expiry date marked, the customer is really only permitted to use it for a ‘reasonable’ length of time after it was originally purchased. This means if they returned years later to try to use the gift card, you could arguably not permit them to do so. But from a commercial and marketing perspective, it would be a goodwill gesture! 

  6. Market them as a ‘gift’ product for multiple uses.

    Providing gift cards as a means of payment for goods is essentially providing a ‘non cash’ payment facility, so businesses must market them as a ‘gift’ product and not, for example, as a cash ‘alternative’. This means, if you are selling a gift card, you must treat it as if it is one of your items for sale.

    The card must also permit more than one purchase, or permit multiple uses until the full monetary amount is used or the expiry date is met. You cannot limit it to a single purchase. 

Gift cards are a great way to attract new customers and increase brand awareness for your business, as well as improve sales. The gift card market is growing rapidly, and while you don’t want to pass up this excellent marketing opportunity, always keep in mind the five important terms you need to offer.

What are your thoughts on offering gift cards?

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  • Andrew Caska

    Caska IP Patent Attorneys

    'Flying Solo opened up so many doors for us - I honestly don't know where I'd be without it"