What is a gift card or store credit? (and should you offer one)

What the terms mean

A gift card is value someone buys from you to give to another person. Store credit is value you give a customer, for example instead of a refund, to spend in your store later. In both cases the customer now holds a balance with you.

From your side, you have received money, or kept money, and you now owe the customer goods in future.

A simple Rs 500 example

A customer buys a Rs 500 gift card for a friend. You receive Rs 500 today. You have not sold a product yet. You owe goods worth Rs 500.

Later the friend buys a Rs 380 candle with the card. A balance of Rs 120 stays with them. You owe Rs 120 in future goods. The next time they shop, they use the remainder.

You can see how this differs from a normal sale. The money arrived before the product left, and a small leftover can sit for months.

Why sellers consider offering one

• It gives gifting customers an easy option when they do not know the receiver's taste or address.
• You receive cash before you spend on stock or shipping.
• The receiver may become a new customer who would not have found you.
• Store credit can keep value in your business when a customer would otherwise take a refund.

What can go wrong

• Balances you lose track of. A card from months ago, with nobody remembering the amount.
• Disputes. "I had Rs 500 left" versus your record of Rs 380.
• Misuse or duplication, if codes are easy to copy.
• Confusion at checkout if your system cannot apply the balance.
• Seasonal stock that changes between purchase and use, so the card is spent on items that cost you more.

The bookkeeping to remember

Keep a simple list: code, original value, date issued, amount used, balance, and expiry if you set one. Update it every time the code is used. A shared spreadsheet is enough at small scale.

I will not give accounting or tax guidance here. How a card is treated in your books, and for tax, is a question for your CA. Ask before you start selling them.

Likewise, decide your own terms in writing: whether a card expires, whether it can be exchanged for cash, whether it covers shipping. Confirm any legal expectations with a qualified adviser rather than guessing.

What Varchas supports today

Having looked through the store and admin code, I did not find a gift card or store credit feature in Varchas Stores. The closest tool is a coupon code, which gives a discount and is not the same as a prepaid balance. If you want to offer credit, you would handle it manually, for instance by creating an order for the customer later and marking it as already paid. The post on how to create an offline WhatsApp order shows the order-entry flow.

A lighter alternative

If your concern is gifting, you can sell a ready gift hamper or a set, and let the buyer enter the recipient's address and message. The post on how to start selling gift hampers online covers that route. For a refund-or-credit decision, see exchange versus refund.

Should you offer one

If you already struggle to keep track of orders, wait. A gift card makes sense when you have a steady record-keeping habit, a clear policy, and customers who actually ask for one. Until then, a good product page and an easy order path may serve gifters better.

The takeaway

A gift card turns today's cash into tomorrow's obligation. Offer it only when you can track every balance and have your CA's view on the books.