Gift Card Glossary: Definitions of 30+ Key Terms
Use this comprehensive glossary to understand the technical, legal, and practical terminology used in the gift card industry.
A
Activation
The process by which a merchant validates a gift card at the point of sale, enabling it to hold value and be used for purchases. Cards are typically "inactive" until scanned at a register.
B
Balance
The remaining monetary value stored on a gift card that is available for spending.
Barcode
A visual representation of data (usually card numbers) that can be scanned by a laser or camera for quick transaction processing.
C
Card draining
A type of fraud where a criminal records a card's information and spends the balance as soon as a legitimate customer activates it.
Card issuer
The financial institution or retailer that creates the gift card and holds the funds associated with it.
Closed-loop
A gift card that can only be used at a single retailer or a specific group of related stores (e.g., a Starbucks card).
CVV/CVC
Card Verification Value or Code; a 3 or 4-digit security number used for online or "card-not-present" transactions.
D
Digital gift card
An intangible gift card delivered via email, SMS, or app, consisting of a code rather than a physical plastic card.
Dormancy
A period of time during which there is no transaction activity on a gift card, which may eventually trigger inactivity fees.
E
e-Gift card
Another term for a digital gift card, highlighting its electronic delivery method.
Escheatment
The legal process by which unclaimed gift card balances are transferred to the state government after a set period of years.
Expiration date
The date after which a gift card or the funds stored on it are no longer valid for use.
F
Float
The total value of all issued gift cards that have not yet been redeemed by customers; the issuer holds this money as a liability.
G
Gift card
A prepaid stored-value money card used as an alternative to cash for purchases within a particular store or network.
I
Inactivity fee
A fee charged against the card balance after a period of non-use (usually 12 months minimum under US law).
Issuer
The entity legally responsible for honoring the value of the gift card.
L
Load
The act of adding monetary value to a gift card, usually done at the time of purchase or via a reload process.
M
Magnetic stripe
The black or brown strip on the back of a physical card that stores digital data readable by a card reader.
Merchant
The retailer or business that accepts the gift card as payment for goods or services.
Mobile wallet
An app (like Apple Wallet or Google Pay) that allows users to store and use digital versions of their gift cards.
N
NFC
Near Field Communication; a technology allowing cards or smartphones to communicate with payment terminals wirelessly via close proximity.
O
Open-loop
A gift card that runs on a major payment network (Visa, Mastercard, etc.) and is accepted at most merchants that accept that network.
P
Partial redemption
Using only a portion of the gift card balance for a purchase, leaving the remaining funds for future use.
PIN
Personal Identification Number; a secret code needed to authorize transactions or check balances, often hidden under a scratch-off panel.
Prepaid card
A broader category including gift cards, where funds are loaded onto the card before it is used.
Q
QR code
A square barcode often used for digital gift cards that can be scanned by smartphone cameras or POS systems.
R
Reload
The process of adding more money to an existing gift card balance (only possible on "reloadable" card types).
S
Scratch-off PIN
A security feature on physical cards where the PIN is covered by a silver coating to ensure it hasn't been viewed before purchase.
Split payment
Using two or more payment methods for a single transaction (e.g., using a gift card and a credit card together).
Stored value
A financial system where the monetary value is recorded directly on the card or in a central database linked to the card number.
T
Transaction limit
A maximum or minimum amount that can be spent or loaded in a single transaction as set by the issuer.
V
Vanilla Visa
A common brand name for a non-reloadable, open-loop Visa gift card often found in retail stores.
Virtual card
A gift card that exists only as digital data; it has no physical counterpart and is used primarily for online shopping.