Prepaid Gift Card Accounting Issue

Hi @bjolysharp,

I understand that you are using the premium plugin Lightspeed POS Integration and Gift Cards here.

According to forum guidelines, we dont provide support for the premium extension here in the public forum. If you have a valid license with us, can you please open a support request for us to investigate further about your issue?

Meanwhile, I will mark this thread as resolved since our Happiness Engineers would best handle your concern there.

Thanks!

I wish to circle back to this issue as it has not been resolved. We are not using premium plugins assumed, This issue pertains to native Woo Commerce gift card accounting behavior.

Our client has $100K+ worth of sold prepaid gift cards through Heartland payments. They accept payments online using Heartland’s SecureSubmit plugin. The problem that we have with prepaid gift cards, is that Woo does not support multiple payment types. Consequently, the order totals are changed when the prepaid gift card is applied. By changing the order totals, this impacts back-end integrations downstream, resulting in problems reconciling sales and revenue reports.

Per the Woo Commerce documentation:

How are prepaid gift cards accounted for?

When using a prepaid gift card to pay for an order, partially or fully, cart/order line items are not discounted and product/order revenue is recorded in full under?Analytics > Products?and?Analytics > Revenue.

However WooCommerce does not natively support multiple payment methods per order. To work around this limitation, the plugin modifies the order total of every order that is paid with gift cards, partially or fully. Plugins that read or display order totals will not be able to correctly identify gift cards as a payment method, unless an integration is written to support Gift Cards.

If the Woo team understands that this limitation, then why not add support for multiple payment methods per order? Is the Woo team planning to add support for multiple payment methods per order?

Thank you

Hey, @bjolysharp! Thanks for clarifying.

I understand how the way things work at the moment can affect reports.

At the moment, we have nothing to announce regarding accepting multiple payments or modifying how the Gift Card works.

We appreciate your suggestions and are always looking for ways to improve our products and services, and input from users like you is invaluable.

We have a website where you can submit feature requests and upvote the ones other people submitted and you like. You can check that out here.

I’ve also found an enhancement request to accept multiple payments here. If you wish, you can comment on it so our team sees there’s interest for this.

Having said that, you might want to take a look at gift card plugin options, which might help you with the issue.

Please let us know if there’s anything else we can do to help or if you have further questions.

Have a wonderful day!

Hi @shameemreza,

I would like to clarify my last comment. I think my reference to the Gift Card plugin FAQ caused some confusion. While our client is using the Heartland’s Secure Submit plugin for gift cards, it’s essentially behaving the same way as the Woo Gift Card plugin. Like the Gift Card plugin, the Secure Submit plugin deducts the applied gift card amount from the order total, similar to a coupon. This appears to be incorrect, at least according to prevailing accounting rules in the USA. Per https://www.accountingtools.com/articles/accounting-for-gift-cards-gift-certificates:

“The essential accounting for gift cards is for the issuer to initially record them as a liability, and then as sales after the card holders use the related funds… The initial sale of a gift card triggers the recordation of a liability, not a sale. This is a debit to cash and a credit to the gift cards outstanding account. When a gift card is used, the initial liability is shifted into a sale transaction.”

If the initial gift card purchase is not a sale, then it would not be taxed at the time of sale. The gift card amount becomes a liability for the issuing merchant. When the gift card is used to make a purchase, either in-store or online, the amount is applied as a payment to the order total. This way the revenue becomes part of the sale and taxed accordingly.

It would seem to me, the best way to handle prepaid gift cards at Checkout, is to apply them as we would a payment. However, a customer could, theoretically, apply multiple gift cards in one purchase, along with a credit card (or other supported payment method).

Please advise.

Hi @carolm29,

Thank you for your reply. Looks like you posted it while I was in the midst of drafting my comment.

I’ll take a look at the feature request you mentioned. I also want to point out, that I believe Adobe Commerce is treating gift cards the same way, applying them essentially as discounts. But this seems to assume that the initial gift card purchases are counted as sales and taxed at the time of gift card purchase. It would make sense in this case to treat the gift card as a discount, but this does not align with proper accounting rules.

Hi @bjolysharp

Your insights on the accounting principles surrounding gift cards are very informative and I agree that it would be ideal if WooCommerce could handle gift cards as payments rather than as discounts. However, as of now, WooCommerce does not natively support multiple payment methods per order, and there is no immediate plan to implement this feature.

That being said, your feedback is very valuable to us and It would be great to have you add your ideas as a feature request, which is where developers go to look for future plugin features and improvements.

I hope this provides some clarity. Please let us know if you have any other questions!