Physical gift cards on Shopify POS: tracking the plastic, the liability

The drawer behind the register holds 84 plastic gift cards. That number feels like inventory, and it isn't — not to Shopify, and not to your accounting. Shopify tracks the balance on every card code it has issued; it has no idea which blanks are in your drawer, and the moment a customer pays for one, that $50 isn't revenue you can spend on stock. It's money you owe in product. This piece covers how physical gift cards actually work on Shopify POS, the small ledger that keeps the plastic honest, and the liability-versus-COGS point that stops the year-end surprises.

How physical gift cards actually work in Shopify

Start with what the plastic is: packaging. Shopify's Help Center describes physical gift cards as "pre-made plastic cards with pre-assigned codes on them." You order them customized from the Shopify Hardware Store in supported countries. Until a card is issued through your POS, it carries nothing — no balance, no redemption value, nothing to steal except a piece of plastic.

Issuance happens at the till. You scan the card's QR code or barcode in Shopify POS at the time of purchase, the customer pays, and that specific code now holds the balance they bought. Behind the scenes you need two settings in place (both per Shopify's POS gift card docs, as of November 2026):

• Gift card products. These live under Products → Gift cards in the admin. Each denomination — $25, $50, $100 — is a variant, capped at $10,000 per card.
• "Type to issue" set to Digital or physical. This lives in the POS editor in your Shopify admin (Sales channels → Point of Sale → Edit POS app → Settings → Gift cards) and applies to every POS device at every location.

One asymmetry matters if you sell both in person and online: an online order for a gift card product produces a digital gift card on fulfillment. Shopify states plainly that online orders aren't linked to a specific physical card, so pre-printed plastic is issued only through POS scans. If someone buys a "physical card" over the phone, the honest workflow is to take payment however you like and then scan a blank at your till to load it.

Also know that gift cards are treated like currency: Shopify's docs note you can only view the last four characters of any code, so nobody inside the store can read a full balance off the admin screen. That's a feature, not an inconvenience.

What Shopify tracks, and the two things it doesn't

Shopify tracks balances. Every issued card sits in Products → Gift cards with its value, and the gift card finance reports in your admin summarize gift card sales and payments on orders. That's the money side, handled.

It does not track, first, which blanks remain in the drawer. Shopify knows 96 cards were issued this month; it can't tell you whether the box behind the register holds 104 blanks or 61. And it does not track the physical custody of issued cards — the card handed to a customer, the card an employee loaded by mistake, the card that fell behind the counter and got sold next month as a fresh blank.

Neither gap is exotic. Both are a paper ledger away from solved, and this is the whole discipline of selling plastic:

The plastic ledger (illustrative, for a coffee roaster's December):

Four numbers, five minutes a week: blanks received, blanks issued (POS history gives you the count), blanks remaining, and redeemed value. Two rules make it stick. Reorder blanks at a floor — say, 50 remaining — because a store out of gift cards on December 20 has a very short conversation with a gift buyer. And reconcile the drawer monthly: count the plastic, compare it to the ledger, and investigate the difference like any other shrinkage. A blank card is worthless; an issued card sitting in your drawer is cash you've accepted for goods you haven't delivered.

Liability, not COGS: how the money actually flows

Here's the part that saves a painful January conversation with your bookkeeper.

When a customer buys a $50 gift card, you've received $50 for a product you haven't delivered. In normal accounting treatment, that $50 sits as a liability — money owed — until the card is redeemed, at which point the liability converts into revenue for whatever they buy. If they redeem it against your coffee beans, the beans carry their normal cost of goods; the gift card itself never touches COGS, because it isn't a tracked product. It's a payment instrument.

The merchant mistakes this framing prevents:

• Booking card sales as product revenue at the till. That overstates income in the month of sale and understates what you owe later. The Shopify docs themselves flag that "laws and regulations about gift cards vary based on region" — validity periods, escheatment, tax treatment — and point sellers to a local tax or legal expert. Your bookkeeper will want the issued-versus-redeemed split, which the ledger above gives you.
• Treating the plastic as a SKU. Gift card products are digital products with denominations as variants; there's no quantity to count, so there's nothing for inventory tracking to do. The stock you manage is the box of blanks, and it lives on the ledger, not in Shopify's inventory.
• Forgetting that unredeemed balances are future fulfillment. That $2,715 outstanding from the example is January and February product walking out the door. Plan for it like any other demand signal.

One cost note while we're being precise: for Shopify stores created on or after May 12, 2025, Shopify's help docs state that orders paid with a gift card are charged third-party transaction fees on the amount paid that way. Check how that applies to your plan and gateway before you promise "no fees" on gift card redemptions.

Q4 demand, and the January wave

Plastic gift cards are a Q4 product with Q4 logistics. Card sales cluster between Black Friday and December 24, which means two clocks run at once: your stock of physical cards (order blanks well before BFCM week — the Hardware Store is a supplier with lead times like any other) and your general Q4 capacity, which is what the BFCM inventory planning guide is for. A gift card is also the classic answer to the December 22 stock question — the gift you can't run out of — so treat blanks as a never-out item for the season.

Then flip the calendar. January is when those balances get redeemed: gift recipients arrive with cards, and redemption is fulfillment work you already accepted payment for. The post-holiday inventory reset covers the week-after protocol — reconciling what actually sold, counting the damage, restocking the winners — and gift card redemptions belong in that plan, because they consume the same shelf stock as everyone else's cash. One adjacent note: if you also refund orders to store credit, that's a related but distinct instrument from a purchased gift card, and the rules you set for each should live in your return policy.

Common questions

Are physical gift cards inventory in Shopify? No. Gift card products are digital products — denominations are variants, and there's no quantity to track. Shopify tracks each issued card's balance instead. The only physical thing to manage is the box of unissued blanks, which you track on your own ledger: received, issued, remaining.

Can I sell a physical gift card through my online store? Not as plastic. An online gift card order produces a digital gift card on fulfillment, and Shopify states online orders aren't linked to a specific pre-printed card. To get plastic into a customer's hands, sell online for pickup if you like, then scan a blank at your POS to load it before handing it over.

Does a blank gift card hold any value before it's scanned? No. Shopify describes physical cards as pre-assigned codes that get issued by scanning in POS at purchase — until then there's no balance attached. A stolen box of blanks costs you the plastic, not the money. The risk case is an issued card that never reached a customer, which is why the drawer gets counted monthly.

Where do I see how much my customers owe in unredeemed gift cards? The Gift cards page in the admin lists every issued card and its remaining balance, and the gift card finance reports summarize sales and payments on orders. For a liability figure, subtract redeemed value from total issued — the ledger habit above — and take that number to your bookkeeper.

Should gift card sales count as revenue when the card is sold? Usually not — the typical treatment books the sale as a liability until redemption. But gift card rules genuinely vary by region on validity, taxes, and unused balances, and Shopify's own docs defer to a local tax or legal expert on exactly this. Ask your bookkeeper how they want the ledger split; don't guess.

Next step

Build the four-line plastic ledger this week — blanks received, issued, remaining, and redeemed — and set a reorder floor for the drawer before the Q4 peak. Then put the January redemption wave on the same plan as everything else with the post-holiday inventory reset, so the balances you're carrying turn into smooth handoffs instead of a surprise rush.