A digital gift card (also called an e-gift card) is essentially a prepaid card that you send or receive online. Digital gift cards are delivered electronically to a recipient (by email, text, or in-app). It comes with a unique code that can be safely used for online purchases or in-store transactions.
From last-minute presents to reducing plastic waste, digital gift cards are also changing the way we shop and share our love with friends and family.
If you're a restaurant or retailer thinking about offering digital gift cards, here's what you need to know.
What's the Difference between Digital and Physical Gift Cards?
The core function is the same: money is loaded onto a card for someone to spend it. The main difference is how the card reaches from the seller to the recipient, and it’s worth noting the benefits of the two card types:
Digital Gift Cards
E-gift cards are purchased and delivered online, usually by mail, text, or in-app. The recipient receives a unique code they can scan at checkout—all on their mobile. For many customers, digital gift cards are their preference. Here’s why:
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It’s easy to use. Digital gift cards have a straightforward process. It often gets emailed to the recipient and sits on their phone until they’re ready to purchase.
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It’s available instantly. E-gift cards are delivered to the recipient in seconds. That convenience turns the choice to buy a gift card later into something they can do now.
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There’s no geographical limit. Digital gift cards can be sent to anyone, anywhere. Customers don’t have to think about distance or rush in-store to buy a gift card. If they want to send a gift, they can—no matter the place or time.
Physical Gift Cards
Physical gift cards are a tangible item often purchased in-store and activated at checkout. The recipient receives the gift card in person or by mail. Gift cards remain a popular choice for consumers. There are many reasons:
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It feels more intentional. A physical gift card takes more effort. It’s purchased in-store and given in person. Compared to e-gift cards, that extra effort can make the gift feel more thoughtful.
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The experience of receiving matters. Getting and unwrapping a gift is an emotional moment. It adds to how the gift is perceived, especially on occasions (birthdays, holidays).
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It’s the traditional way. Physical gift cards are familiar. The simplicity of only having a card you can use in-store can make it the easier choice for some customers.
Digital vs. Physical Gift Cards: Which One Is Better?
If you're a business owner currently weighing options, you might be wondering which type of gift card (digital or physical) is the better choice for your business.
The honest answer is that neither is inherently better. Both gift cards serve different, yet equally valuable, purposes. Digital gift cards offer customers ultimate convenience—purchases and redemptions are simple and fast. Physical cards are also useful for driving in-store impulse purchases and gifting occasions where presentation matters. The best strategy is often offering both to cover all customer preferences and shopping scenarios.
How Digital Gift Cards Work at the Point of Sale?
For the customer buying the e-gift card:
It’s an easy process. They visit your website or gift card page, choose the amount, enter the recipient’s email or phone number, and pay. It only takes a few minutes. You can usually choose a design for the gift card, add a message, and schedule delivery for a specific date.
For the recipient redeeming it:
They receive an email or text with their unique code. When they’re ready to make a purchase, they show the code at the register in-person or enter it during checkout online. The staff scans the code, the system checks the balance, deducts the balance, and the transaction is completed. If there’s still a balance, it’ll be readily available for the next visit.
On the back end:
This is where your setup matters the most. To make this process seamless, your gift card program connects with your POS system and tracks transactions in real-time—when a card is issued, the gift card amount, and when it gets redeemed. A well-integrated system keeps these updates ongoing and automatic, with no manual effort on your end.
The redemption process—online and in person—also has to stay friction-free. If a customer has to take extra steps to pay, like logging into an account and searching for their gift card in an app, that experience can be improved. Paying with an e-gift card should be as fast as tapping a card.
👉 Check out our guide on setting up a gift card program for your small business.
Why More Canadian Restaurants and Retailers Are Switching to Digital Gift Cards?
The shift is being driven by one thing: meeting where Canadian customers are.
Most Canadians are using mobile wallets and making digital payments regularly. In 2024, over 13 billion transactions used digital payment methods, and over 66% of Canadians use their mobile devices to pay—this number is expected to grow. People in Canada are comfortable paying with their phones, and they now expect digital options.
The Canadian gift card reflects this shift well. It is valued at approximately CAD $12 billion in 2026. Digital is a growing share of that. Convenience and instant delivery are the top drivers—customers are increasingly preferring a digital gift card for everyday payments, beyond gifting occasions.
There are several benefits to offering digital gift cards:
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You can sell gift cards when you’re closed. Your website is live 24/7. A customer who remembers a birthday at 10 pm on a Sunday can still buy your gift card and send it instantly.
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Digital cards are easier to track. Every transaction is recorded. Digital cards can easily show you what’s been redeemed and the outstanding card balances—to your customer and your business. Physical gift cards without the right system can leave a gap in data-driven insights.
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There’s no print or production cost. For a business that sells gift cards at a high or low volume, that expense can be costly over time. With digital cards, the print cost is negated.
While physical gift cards definitely remain valuable, if you’re only offering physical cards, you have an opportunity to reach an even bigger segment of your market by expanding into digital gift card offerings.
Can You Offer Both Digital and Physical Gift Cards?
Yes, and for most restaurants and retailers, that’s the right call.
The customers who want to wrap their gifts and hand them over at a birthday dinner aren’t going away. Neither are the ones who want to send a gift card to a friend across the country in under five minutes—and these aren’t different customers, just different situations.
Your business needs the right system to manage both in one place: keeping amounts accurate, making sure your POS system integrates seamlessly, and giving customers a hassle-free experience that makes them come back—regardless of which gift card format they used.
DataCandy is a gift card platform purposely designed for restaurants and retailers. It gives you a platform that sells, manages, and redeems both digital and physical gift cards—all connected to your existing POS system.
👉 Check out how ZIBO! Restaurants expanded their customer base with DataCandy’s gift card program.
The Bottom Line
A digital gift card is a faster, more flexible version of something customers already understand.
For customers, the appeal is transparent: instant delivery, easy to send to anyone, and no risk of losing it at the bottom of a bag. For businesses, the advantages translate to lower cost, better tracking, and the ability to generate revenue around the clock.
If you're a restaurant or retailer running on physical cards only, or thinking about launching a gift card program for the first time, adding a digital option isn't a big operational lift. With the right platform, it fits into what you're already doing.
See how DataCandy's digital gift card program works.
Frequently Asked Questions
What is a digital gift card?
A digital gift card is a prepaid card that's delivered electronically (usually by mail, text or in-app) instead of a physical card. The recipient gets a unique code they can use at checkout, either online or in-store.
Do digital gift cards expire in Canada?
No. Most Canadian retail gift cards do not expire. By law, gift cards cannot have an expiration date—but there are some exceptions (like promo cards or prepaid cards). If in doubt, check the terms and conditions of your gift card.
Are digital gift cards safe?
Yes, digital gift cards (e-gift cards) are generally safe when bought from a trusted brand and official websites. To stay safe, only buy from legitimate sources and avoid sharing your gift card code.
How do digital gift cards work?
Digital gift cards (e-gift cards) are prepaid codes that are delivered electronically, usually by email or text message. When someone purchases a digital gift card, a unique code or barcode is generated and sent to the recipient.
Can I use digital cards in-store?
Yes, most businesses generally accept digital gift cards in-store, but it depends on the retailer. It’s best to check the terms and redemption rules before use. If the business supports in-store redemption, you can usually show a barcode, QR code, or gift card number on your phone for scanning or manual entry at checkout.
How do digital gift cards work for a small business?
Digital gift cards (e-gift cards) work the same, no matter the size of your business. As a small business owner, you have to choose the right gift card software to set up. The right system enables your business to manage and sell gift cards to customers. It also integrates with your POS to facilitate the process of redeeming gift cards. Learn more about gift card programs for small businesses.
Can I sell digital gift cards through my POS system?
Yes, you can sell digital gift cards directly through your POS system when it’s integrated with a platform like DataCandy, which enables businesses to issue, send, and manage digital gift cards in real time at checkout, with balances automatically tracked and redeemable in-store or online.