Can You Use Zip to Buy Gift Cards In-Store?

Zip, formerly known as Quadpay, offers consumers a “buy now, pay later” financial service, allowing individuals to divide the cost of purchases into smaller, interest-free installments. This service aims to make shopping more flexible by spreading out payment obligations without requiring the full amount upfront. It provides an alternative payment method for consumers seeking to manage their budgets more effectively.

Understanding How Zip Works In-Store

Using Zip for in-store purchases involves a few preparatory steps. Users download the Zip mobile application and set up an account, linking a preferred debit or credit card for repayments. This linked payment method is how Zip collects installment payments.

When ready to make an in-store purchase, the Zip app generates a virtual card. This virtual card functions like a regular payment card, often integrating with digital wallets like Apple Pay or Google Pay for contactless transactions. If a merchant does not support digital wallets, the app displays the virtual card details—card number, expiration date, and security code—for manual entry. The user enters the exact purchase amount into the Zip app to create a “purchase request,” which loads funds onto this one-time virtual card for the transaction.

Merchant and Zip Policies on Gift Card Purchases

Using Zip for purchasing gift cards in-store is subject to specific policies from both the merchant and Zip’s own terms of service. Many retailers prohibit the purchase of gift cards with credit-like services due to financial and fraud prevention concerns. Gift cards are considered cash equivalents, making them targets for money laundering schemes and fraudulent activities.

Merchants implement these restrictions to mitigate risks like chargebacks, where a fraudulent purchase with a service like Zip could result in the gift card being used before the payment is disputed and reversed. Anti-money laundering (AML) regulations require businesses to implement programs to detect and report suspicious transactions, especially for large gift card purchases. Some merchants may limit the maximum value of gift cards sold or require customer identification to comply. Zip’s terms of service explicitly state their service generally cannot be used for gift cards, gift vouchers, or prepaid stored value cards in the US. This aligns with their list of restricted business categories, which includes “Gift cards and stored value.”

Steps for Making a Purchase Attempt

If a user decides to attempt a gift card purchase with Zip in-store, despite potential policy restrictions, the process involves specific actions at the point of sale. First, the user should open the Zip app and navigate to the in-store payment section. Here, they would create a purchase request by entering the exact amount of the gift card they intend to buy.

After confirming the amount, the Zip app generates a one-time virtual card for payment. This virtual card can be used via digital wallet or manual entry. If the transaction is declined, it is likely due to the merchant’s policy prohibiting gift card purchases with credit-like payments or Zip’s own terms, rather than an issue with the Zip account itself.

Key Factors to Consider

When attempting to use Zip for in-store gift card purchases, several factors should be considered. Even if a transaction technically processes, its success is not guaranteed due to varying and often restrictive merchant policies. Store systems may be configured to decline such transactions regardless of the payment method.

Users should also be aware of potential fees. While Zip promotes interest-free installments, finance charges ranging from $4 to $7.50 may apply depending on the purchase price. Missing a scheduled payment can result in a late fee, typically around $7 in the US, and a dishonor fee if the bank rejects the payment. Users can monitor their available spending power and transaction history directly within the Zip app.