Gift Card Cash Out
Laws, Explained.

Fourteen U.S. states require or authorize cash redemption of qualifying gift card balances: California, Colorado, Connecticut, Hawaii, Maine, Massachusetts, Montana, New Jersey, New York, Oregon, Rhode Island, Texas, Vermont and Washington. Puerto Rico also has a cash-redemption provision. The balance threshold and eligibility requirements vary by state.

California currently has the highest general small-balance threshold, requiring qualifying gift cards with a cash value of less than $15 to be redeemable for cash. Other states generally have thresholds ranging from less than $1 to $5, while Massachusetts uses different rules depending on the type of card.

Gift card cash out is the redemption of a remaining gift card balance for money instead of merchandise or another gift card.

‍For example, if a customer has $4 remaining on a closed-loop merchant gift card, state law may give the customer the right to receive that $4 as cash rather than requiring them to spend it with the merchant.

Gift card cash-out rules are primarily determined by state law. The applicable threshold, card types, exclusions and redemption requirements vary by state.

Gift card cash-out thresholds vary by state, generally ranging from less than $1 to less than $15.

‍California has the highest general small-balance threshold at less than $15. Colorado requires cash redemption at $5 or less; several states use less than $5; Texas uses less than $2.50; and Rhode Island and Vermont generally use less than $1. Massachusetts has separate rules based on whether a gift card is reloadable or nonreloadable.

Not every gift card below a state's threshold necessarily qualifies. Some states require a prior purchase or redemption and may exclude certain promotional, loyalty, low-value or other cards.

Yes. California requires a qualifying gift card with a cash value of less than $15 to be redeemable for cash. The current $15 threshold became effective on April 1, 2026, increasing California's previous threshold of less than $10.

California's rules apply to gift certificates as defined by state law, which includes gift cards and electronic gift cards, subject to statutory exclusions. Certain gift certificates donated to nonprofit or charitable organizations can also be excluded from the small-balance cash-redemption requirement when statutory conditions are met.

A merchant generally cannot refuse a valid gift card cash-out request when applicable state law requires the qualifying balance to be redeemed for cash. Whether the merchant must honor a particular request depends on the state, remaining balance, type of gift card and any statutory conditions or exclusions.

In states without a mandatory cash-redemption provision, merchants may generally establish their own cash-out policies subject to other applicable laws and the terms of the gift card program.

Consumers and merchants should therefore check the requirements of the applicable state before determining whether a particular gift card must be redeemed for cash.

Digital gift cards can be covered by gift card laws, depending on the applicable state law and the type of gift card. A gift card does not necessarily need to be a physical plastic card to receive legal protection.

Federal Regulation E, for example, defines covered gift cards broadly enough to include a card, code or other device and expressly recognizes electronically issued promises and merchant codes. California's statutory definition expressly includes electronic gift cards.

Because definitions and exclusions vary by jurisdiction, merchants should determine whether a particular digital gift card qualifies under the applicable state cash-redemption statute.

Promotional gift cards do not always qualify for mandatory cash redemption. Several state laws exclude certain promotional, loyalty, rewards or complimentary gift cards from some gift card requirements.

The distinction often depends on whether the consumer gave money or another thing of value in exchange for the card. A $50 gift card purchased for $50, for example, may be treated differently from a $10 promotional card provided free as part of a marketing campaign.

Merchants should review the specific state definition and exclusions before determining whether a promotional gift card is eligible for cash out.

Whether a merchant can satisfy a gift card cash-out obligation by mailing a check depends on the applicable state law and the circumstances of the redemption. State statutes commonly describe qualifying balances as redeemable for "cash," but they do not all prescribe the same fulfillment process.

Paper checks have historically been one way merchants handle remote gift card cash-out requests when a customer is not present at a cash register. However, merchants should confirm that their chosen fulfillment method satisfies the specific law that applies to the transaction.

For merchants, checks can also introduce printing, postage, mailing, reconciliation and exception-handling costs for a payment that may only be a few dollars.

Gift card cash outs can potentially be fulfilled digitally, but merchants should confirm that a digital payment method satisfies the applicable state's cash-redemption requirements.

State gift card statutes were not written uniformly, and many use terms such as "cash" or "cash value" without prescribing a modern digital payout method. The appropriate fulfillment method therefore depends on the applicable law and the merchant's compliance policies.

TodayPay provides digital payout infrastructure that can enable merchants and gift card platforms to deliver eligible gift card cash-out value electronically, replacing manual fulfillment processes such as paper checks.

No. Federal gift card law does not generally require merchants to redeem small remaining gift card balances for cash; cash-redemption requirements are primarily established by state law.

Federal protections under the Credit CARD Act and Regulation E instead address issues including gift card expiration dates, dormancy and service fees, disclosures and related consumer protections. Federal rules generally prohibit covered gift card funds from expiring for at least five years and restrict certain inactivity fees.

States may provide additional protections, including requiring qualifying remaining gift card balances to be redeemable for cash. Currently, 14 states plus Puerto Rico have statutory cash-redemption provisions.