Gift Certificates

What are Gift Certificates?

Let’s start with the basic WHAT, the WHY, then the HOW of Gift Certificates…

Who: Several major department stores (first unknown);

What: The shape, and size of a paper check, printed with a face value;

When: The practice started in the 1930s;

Why: Purchased by consumers as a flexible gift, rather than a particular item;


How They Work

Consumers wishing to give a gift but uncertain what the most appropriate gift might be, often turn to a “Gift Certificate” or now more frequently to a “Gift Card” the modern-day version.

At the time of purchase, the value of the “Gift” is selected, and the purchase is made just as any other sales tax included if applicable in the subject state.

The receiver of the “Gift” may redeem the face value of the card or certificate with the specified merchant (issuer). This purchase completes the transaction and the card or certificate is extinguished.


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