A customer pulls out their phone to redeem an eGift card you sold them. There's no barcode. No redemption code. Just an email from Square with your logo on it and nothing to scan. You find out when they call you, frustrated, while there's a line at the counter.
While you were troubleshooting that call, how many other customers pocketed the balance as a free gift and never came back? Square has no answer for that. The support thread about it has been sitting open for years.
If you're searching "Square Issuing v2 vs competitors," that's probably where you are. Here's the actual breakdown.
If you're evaluating Square as a full payment processor rather than just its gift card product, see the complete Square Issuing V2 payment processing review.
What "Square Issuing v2" Actually Is
It's not an official Square product name. It's what merchants search when they're trying to figure out whether Square's gift card and card issuing tools have improved enough to trust — or whether something better has come along.
Square's real offering is a closed-loop merchant gift card program: physical cards and eGift cards. It is not a card issuing API like Stripe Issuing or Marqeta. It's a gift card product built to keep merchants inside Square's ecosystem, which is both its only real strength and the thing that will eventually cost you.
Where Square's Gift Card Program Breaks
Setting it up is easy. What happens when a real customer tries to use the card is a different story.
These aren't edge cases. They come from Square's own community forums, reported by merchants, unresolved for years:
No redemption code in eGift notifications. Customers get an email with nothing to scan or enter at checkout. No barcode, no long code. Merchants have no way to regenerate the code from the dashboard. The customer is stuck, you look incompetent, and Square's support thread offers nothing useful. One merchant posted about it under the subject line: "Square's eGift Card is ridiculous, makes Sellers look terrible" — it's been open for years. (reported by sellers on Square’s community forum)
Gift cards break at checkout when they cover the full sale. When a gift card balance exactly covers or exceeds the order total, Square fails to prompt for a tip. Merchants have to awkwardly ask customers manually and work around the system. If a customer tries to add a tip that pushes the total above the card balance, the transaction gets declined. A massage business owner in the thread said she was considering dropping gift cards entirely because of how "embarrassing" the workarounds are at the register. Square's moderator acknowledged the issue and said they'd "continue to work on solutions in future versions" — with no timeline. (reported by sellers on Square’s community forum)
You eat the fees on every sale — and they got worse in 2024. Square prohibits passing fees to customers, and most states back them up since the card value is fixed. In March 2024, Square added a 2.5% gift card load fee on top of standard processing fees. One merchant did the math publicly: "So if someone buys one of my cards and puts $50 on it, pays with a credit/debit card, I lose $5 plus the cost of the card." Another put it more bluntly: "You get to save a few cents on a reusable physical gift card but you now get the privilege of paying us an extra $25 on a $1,000 eGift card." At $2,000/month in gift card volume, the 2.5% load fee alone is $50 — before standard processing fees on those same transactions. Over a year: $600+ in load fees that can't be recovered. That's the bill for cards that advertise Square's brand, not yours. (reported by sellers on Square’s community forum)
The program is locked to your Square account. Switch processors and it dies. Every unredeemed balance becomes inaccessible. Customers who have cards are left with nothing.
Most merchants know they're overpaying on Square. They stay anyway. The longer you've been there, the harder leaving feels — and that feeling is the lock-in doing exactly what it was designed to do. Square has built this dependency because it benefits them, not you. Every month you stay adds more gift card data and program history that makes switching feel more expensive than it actually is.
No merchant branding. Cards carry Square's name. Every gift card that changes hands is free advertising for Square, not for your business.
In 2024, Square repriced its gift card product in a way that left enough merchants confused that people were publicly asking whether the company was planning to discontinue it. That's not a stable foundation for a customer-facing program.
Open-Loop vs Closed-Loop
Most merchants searching this topic need a closed-loop program.
Open-loop cards (Visa/Mastercard) can be spent anywhere those networks are accepted. Stripe Issuing, Marqeta, and similar platforms are open-loop — built for fintechs, corporate spend management, gig economy payouts, and travel companies. They're developer-heavy and sized for enterprise budgets.
Closed-loop cards are redeemable only at the merchant that issued them. Valutec, Givex, Paytronix, and Yiftee work this way, built to be sold through payment agents and ISOs alongside processing.
If you run a restaurant, retail store, or service business — closed-loop is what you need.
The Full Comparison
Before going through each option: a merchant processing $50,000/month at Square's in-person flat rate (2.6% + $0.15) pays around $1,315/month in fees. Interchange-plus pricing at the same volume typically runs $950–$1,100 depending on card mix. That $200–$365 monthly gap pays for a gift card program — usually with money left.
| Platform | Type | White-label | SMS delivery | Portable | ISO channel |
|---|---|---|---|---|---|
| Square Gift Cards | Closed-loop | No | No | No | No |
| Stripe Issuing | Open-loop API | Yes | N/A | Yes | No |
| Marqeta | Open-loop API | Yes | N/A | Yes | No |
| Valutec | Closed-loop | Yes | Yes | Yes | Yes |
| Givex / Shift4 | Closed-loop | Yes | Yes | Yes | Yes |
| Paytronix | Closed-loop | Yes | Yes | Yes | Yes |
| Yiftee | Closed-loop (digital) | Yes | Yes | Yes | Yes |
Stripe Issuing is fast to set up, well-documented, and integrates cleanly with Stripe's stack. A good product for dev teams building embedded finance tools. A merchant wanting branded gift cards has no use for it.
Marqeta is the most powerful card issuing infrastructure in the market — deeply customizable, real-time authorization controls, just-in-time funding. Also requires a minimum six-month implementation and enterprise contracts. Not the right tool for a merchant gift card program.
Valutec is built to be sold alongside payment processing through the ISO and payment agent channel. Merchant-branded physical and digital cards, SMS and email delivery, white-labeled reporting portal, integrates with most major POS systems. The program stays with the merchant regardless of what processor they're using.
Givex (now Shift4) is strong in restaurants and enterprise, with broader international coverage than Valutec. Acquired by Shift4 in 2023. Solid reseller program, especially for multi-location operators.
Paytronix combines gift cards with loyalty, built for multi-unit retail and restaurant chains. More implementation lift than Valutec or Yiftee, but the loyalty layer earns its keep for businesses where repeat customers drive most revenue.
Yiftee is digital-first eGift cards for independent and local businesses — over 55,000 merchants. You add a link to your website, buyers land on a custom-branded card page, and delivery happens via SMS and email. Lowest barrier of any option here.
The Numbers Behind Gift Cards Most Merchants Ignore
The US gift card market was $207 billion in 2025, heading toward $220 billion in 2026 (market research estimates, 2025–2026; multiple industry analysts). Digital cards account for 58.3% of that revenue, growing at 20% annually.
Gift card buyers spend above face value more often than discount shoppers do — 79% of consumers report spending more than their gift card balance, per Fiserv's Q1 2024 Gift Card Gauge. A customer redeeming a $50 card at your business is probably spending $60–$70. They convert to repeat customers at higher rates and are more likely to join a loyalty program at redemption. A merchant running $5,000/month in gift card volume typically finds the downstream revenue from overspend alone exceeds the program cost.
$20–25 billion in gift card value also goes unredeemed every year in the US (industry estimate; various sources including NRF and Fiserv). Under some platform agreements, that breakage flows back to the platform — not to the merchant who sold the card and built the customer relationship. Before signing anything, ask: "Who keeps unredeemed card value, and under what conditions?" Get the answer in writing.
What a Bundled Payment and Gift Card Program Looks Like
When your processor and your gift card platform are the same company, you have no leverage in either relationship. Square sets the rates, the roadmap, and the release schedule — and as the forums make clear, what merchants actually need doesn't always make it on there.
A different model: one account relationship where processing and the gift card program are priced and managed together by someone who knows your business from both sides. Merchants who've been on Square for years and make the switch don't tend to go back.
With ClickWerxs, your cards carry your branding. Physical and digital cards go out via SMS and email. You own the program data, which means it travels with you if you ever change processors. High-risk categories Square routinely turns away are eligible. And there's a dedicated rep who knows your account — not a support queue.
A ten-minute call tells you whether the numbers work. We pull your current rates, run the comparison, and give you a straight answer — including if that answer is "stay where you are for now." No pitch, no obligation.
Frequently Asked Questions
Is Square Issuing v2 an official product?
No. It's what merchants search when researching Square's gift card and card issuing features. Square has a merchant gift card program — physical and eGift cards — but it doesn't carry that name officially, and it is not a card issuing API.
What happens to my gift card balances if I leave Square?
They go inaccessible when you close the account. The real issue isn't the program — it's the live balances customers already hold. A proper transition involves notifying cardholders, honoring existing cards through a wind-down window, and issuing replacements under the new program. Most merchants who've done it say it was less disruptive than they expected.
What's the difference between open-loop and closed-loop gift cards?
Open-loop cards can be spent anywhere on Visa or Mastercard networks. Closed-loop cards are redeemable only at the merchant that issued them. Most SMB merchants need closed-loop — spend stays in-store, you control the program, and you can attach loyalty mechanics to redemption.
Do Square's competitors offer merchant-branded cards?
Yes. Valutec, Givex, Yiftee, and Paytronix all support fully merchant-branded cards. Square does not. Every Square gift card shows Square's branding.
Who keeps breakage revenue from unredeemed cards?
Depends on the platform agreement and your state's escheatment laws. Some platforms keep it; others return it to the merchant. Ask before signing and get the answer in writing.
Square's gift card product is fine if you're fully committed to their ecosystem and not planning to leave. For merchants who've outgrown flat-rate pricing, need SMS delivery, want their own branding, or work in categories Square declines — the lock-in isn't worth it.
This post reflects publicly available product information and operator observation. Competitor product features and pricing may change. This is not an endorsement of any third-party platform. Not legal or financial advice.
Kaleb Dickhaut — Founder, ClickWerxs. Kaleb works directly with merchants to identify and eliminate unnecessary payment processing costs. linkedin.com/in/kaleb-dickhaut
Sources
- ClickWerxs blog, first-party data — Search Console, Bing Webmaster and GA4 figures in this post are measured from ClickWerxs's own properties over the stated period. They are a past result for one domain in one vertical and are not a projection of what any other site will achieve. Operator data.
- Competitor and platform pricing referenced in this post is taken from each company's published pricing or legal pages as of the date noted in text, and is subject to change without notice. ClickWerxs does not link to competitor websites; references are given in text so they remain verifiable. No affiliation is implied.
ClickWerxs sells SEO and AI visibility services and earns revenue from those engagements. First-party figures are past results for this blog and are not a promise of future performance. This is operator opinion, not professional advice.