A restaurant gift card is prepaid money. Someone pays you today, and the guest eats later. The balance sits in your POS as a payment method. The bill settles against it just as it would against cash or a card.
Petpooja POSS runs billing for more than 1,00,000 restaurants, and gift cards are handled inside that same billing screen. There is nothing separate to install. Switching a programme on is a configuration job, decided once and then left to the counter.
This guide covers how the money moves and the steps to switch a programme on. It also covers what happens at the counter, and what the RBI and GST rules say about the balances you are holding.
Key Takeaways
- A gift card is prepaid value you hold until the guest spends it, and it settles at billing like any other tender
- Selling the card is not the taxable event; GST applies later, on the meal it buys
- A card spendable only at your own outlets needs no RBI approval, as long as it cannot be turned into cash
- Issuing and selling sits behind admin rights, so staff cannot hand out value on their own
- Gift cards run on Electron POS, and the unused balance shows as a liability in year-end reports
What Is a Restaurant Gift Card and How Does It Work?
A restaurant gift card is a prepaid instrument your outlet issues. It carries a set value that can be spent only at your restaurant. The buyer may be the person who eats, or someone buying it as a present for another guest.
Indian law calls this a voucher. Section 2(118) of the CGST Act defines it as an instrument the seller must accept as payment. The goods or services it buys have to be named on it, or in its terms.
Your POS creates each card as a code, and runs those codes in sequence so no two cards match. At payment, an OTP goes to the email ID registered with the card. Only the person holding that inbox can spend the balance.
The money flow runs in three stages. The middle one is where a gift card differs from every other tender at your counter. It is also the stage that decides your tax position, so it is worth being clear about.
At stage three the card behaves like any other payment method during bill settlement. The kitchen ticket, the tax working and the sales report all run as normal. Only the tender line changes, which is why the switch needs no change to how your billers work.
How to Set Up and Sell Gift Cards From Your POS
The work splits into a one-time set-up and a two-minute routine at the counter. Take the rules first, because they decide how the card behaves for the next year. Most of these choices are hard to change once cards are in guests’ hands.
- Decide the card values you will sell. Fixed denominations keep the counter simple. Round numbers also make a card easier to gift.
- Set the expiry date. You control this. A short window pushes guests to return sooner, while a longer one reads as more generous and keeps the balance on your books for longer.
- Choose whether partial redemption is allowed. With it on, a guest can spend some of the value now and keep the rest. Leave it off and the card is a single-use voucher.
- Generate the card codes. POSS issues them in sequence, so each card is unique and traceable back through the transaction report.
- Register the guest’s email ID. This is the address the redemption OTP goes to, so a wrong entry here is the one thing that will stall a guest at the counter.
- Sell the card. Issuing and selling sits behind admin rights in Petpooja POSS, so an owner or manager controls who receives a card and for how much. A biller cannot create value on their own.
Redemption is the shorter half. At billing, the biller picks Gift Card as the payment method. The OTP confirms the holder, and the balance comes off the bill. Anything above the balance is settled by cash, card or UPI in the usual way.
Here is how that looks in practice (an example). A café in Vastrapur, Ahmedabad sells a ₹2,500 card in February for an anniversary. The guest spends ₹1,180 on the first visit, so ₹1,320 stays on the card. The café has taken the full ₹2,500 upfront and still has a booked return visit.
[SCREENSHOT TO BE ADDED: replace this line with the image] Image: Gift Card selected as the payment method on the Petpooja POSS billing screen. Alt text: The Petpooja POSS billing screen with Gift Card chosen as the payment method at settlement. Caption: At settlement, Gift Card sits alongside cash, card and UPI as a payment method.
Why Restaurants Run a Gift Card Programme
With the mechanics clear, the question owners ask next is what a programme actually earns them. It helps to weigh this against a straight discount, because the two work differently. The gains are real, but not the kind you can put a single number against.
- Cash comes in before the cost of serving it. You hold the money from the day the card is sold, which is what makes cards suit festival and wedding-season selling.
- A gift card can bring in a second person. The buyer and the guest are often different people, so a card bought by a regular can put a new face at your table.
- The card does not cap the bill. If a guest spends past a ₹2,500 card, the difference is settled by cash, card or UPI at the counter like any other payment.
- Value you owe is visible, not guesswork. Every issued and redeemed balance sits in one report instead of a note in the counter drawer.
How to Promote a Gift Card Programme
A card nobody knows about sells nothing, and this is the step most restaurants skip. The good news is that the best places to sell one are places you already own.
- Offer it at settlement. The guest is standing at the counter with a card in hand. One line from the biller, asked at the right moment, does more than a poster.
- Print the offer on the bill. Every diner reads the bill. A single line at the bottom reaches everyone who eats with you, at no cost.
- Put it on the screen you already run. If you have a digital menu board on an Android TV, it can carry gift card artwork between menu items and offers.
- Reach past guests directly. Your POS already holds the numbers of people who have eaten with you. A WhatsApp message before a festival lands with people who like your food.
- Sell against dates, not seasons. Anniversaries, birthdays and weddings all come with a fixed date, which gives the buyer a reason to act now.
The last point matters more than it looks. A card sold in October for Diwali and a card sold in February for an anniversary both work, because someone had a date in mind.
Gift Card or Virtual Wallet: Which Prepaid Option Fits Your Restaurant
Both hold prepaid money, so owners often ask which one to switch on. They suit different habits. A gift card is built around giving, and a wallet around returning. The table below sets them side by side, so you can match one to how your guests already pay.
| How each prepaid option works | Restaurant gift card | Virtual wallet |
|---|---|---|
| How value is loaded | Issued once at a set value | Topped up at the counter and reloaded as often as the guest likes |
| How the holder is identified | Sequential code plus an OTP to the registered email | Mobile number for the digital wallet, or a physical card that is tapped |
| Who it suits | One-off gifting, festival and anniversary sales | Regulars, staff canteens and food courts |
| Main risk to manage | A wrong email ID stalls redemption | A physical card is a bearer instrument, so whoever holds it can spend it |
| Availability | Electron POS | Electron POS |
The wallet has one use that a gift card cannot match. In a shared dining hall, one card can be loaded once and spent at any counter. That is why a food court POS setup usually runs on a wallet rather than on gift cards.
Neither of these is a loyalty programme, and the difference matters when you decide what to fund. A gift card is money already paid to you. Loyalty gives back a share of what a guest spends, and that comes out of your margin. Our points vs cashback guide compares the two.
Do Restaurant Gift Cards Need RBI Approval?
No, and here is why. A card you can spend only at your own outlets falls into a category the RBI calls a closed system prepaid payment instrument. In plain terms: your money, your card, your restaurant, and no way to take cash back out.
The RBI Master Direction on PPIs puts these outside its rules. Issuing them “is not classified as a payment system requiring approval / authorisation by RBI and are, therefore, not regulated or supervised by RBI”. So you need no licence to run one.
Two conditions carry that exemption. Guests must not be able to spend the card anywhere else, and they must not be able to turn it into cash. Hold both and you stay outside the RBI framework. Break either and you are issuing something else, which is a question for your accountant.
When Do You Pay GST on a Gift Card?
Not when you sell it. CBIC Circular 243/37/2024-GST of 31 December 2024 settled this. A voucher is neither goods nor services, so selling the card triggers no GST. You charge GST later, on the meal the guest buys with it.
That is why the balance sits in your books as value you owe, not as a sale, right up to the moment the guest eats. The card is a promise until then.
The circular also covers breakage, the trade term for value nobody spends. When a card lapses unused, no supply happens, so that money carries no GST either. Worth knowing when you pick an expiry date, especially if you sell cards in bulk before a festival.
What to Check Before Launch Day
Most of this is decided once, before the first card leaves the counter. Getting it right at the start saves awkward conversations later. Those usually start when a guest arrives holding a card nobody at the counter recognises, weeks after it was sold.
- Confirm who holds the admin right to issue cards, and keep that list short.
- Brief billers on the one step guests get stuck on: the OTP goes to the email ID registered when the card was issued.
- Agree an expiry that you are willing to honour, then print it on the card so nobody argues about it later.
- Read the Gift Card Transaction Report in week one. It gives a running summary of every balance issued and redeemed, so somebody is watching the numbers from the start.
- Tell your accountant that outstanding balances carry into year-end reports as a liability until they expire. Say it before the year closes, not after.
That last point is the one owners tend to meet by surprise. Prepaid balances behave differently from a day’s takings, and reading them alongside your payment reports keeps the picture honest. A card sold in October and redeemed in March sits across two months of accounts. That is what the balance report is for.
Conclusion
A gift card programme brings money in before the kitchen does any work. Few things in a restaurant do that. The mechanics are small: set the value, set the expiry, and decide on partial redemption. The billing screen does the rest.
A programme left switched on all year simply has more chances to sell than one opened for a single festival. To see how gift cards and prepaid balances work on your own counter, ask the team for a demo of Petpooja POSS.
Frequently Asked Questions
Refusing cash-out is what keeps the card outside RBI regulation, so most restaurants do not offer it. A closed system instrument is defined partly by the fact that no cash comes back out of it. Set this expectation in your terms before the first card is sold.
Not while the balance is unspent. The money sits as value you owe the guest, and Petpooja POSS carries it into year-end reports as a liability until the card expires. Your accountant will want to know that before the financial year closes.
The trade calls this breakage, and no GST is payable on it because no supply ever took place. The balance simply stops being claimable once the expiry date you set passes, which is one reason to choose that date deliberately rather than leaving it open.
This depends on how your outlets are set up, so confirm it with your account manager before you promise it to guests. If you want one balance that travels across several counters, a virtual wallet is built for that. A physical wallet card is what food courts use.
They answer different problems, and plenty of restaurants run both. Gift cards bring in prepaid money and new guests; loyalty brings existing guests back more often. If repeat visits are the weaker half of your business, start with a loyalty programme and compare tools in our guide to restaurant loyalty software.
