What is a store credit?

Store credit, also known as account credit, customer balance, or store wallet funds, is a brand-issued monetary value that customers can use as a payment method for future purchases. Unlike coupons or discount codes, store credit behaves as quasi-cash inside the brand ecosystem: it reduces the payable amount at checkout without altering product prices or applying promotional logic.

Store credit lives inside a customer’s profile as a balance ledger, growing when the brand adds credit (e.g., refunds, goodwill, rewards) and shrinking when the customer spends it on eligible orders. It is one of the most flexible and economically efficient incentive mechanisms because it keeps value circulating within the brand.

What store credit is used for?

Store credit is commonly issued for:

• Refunds & returns: keeping revenue in-house and preventing cash leakage.
• Customer support compensation: resolving service issues without monetary refunds.
• Loyalty rewards: offering credit as a burn reward instead of fixed coupons.
• Retention & win-back: using small credit amounts to trigger reactivation.
• Make-goods & apologies: resolving missed deliveries, delays, or damaged items.
• Promotion alternatives: offering $X credit instead of percentage discounts.

How store credit works?

Behind the scenes, store credit is maintained as a real-time balance ledger. A robust system must support:

• Balance increases (credit issuance, refunds, rewards).
• Balance decreases (spending, partial spending, adjustments).
• Rollbacks (reversals if an order is canceled).
• Expiration rules (optional).
• Multi-channel redemption (web, app, POS).
• Audit logs (for financial compliance and support).

Why brands use store credit?

Store credit is often more efficient than discounts or gift cards because it influences behavior without eroding brand perception or encouraging discount dependency.

• ‍Keeps revenue inside the system: Store-credit refunds prevent immediate cash outflows.‍
• Creates repeat purchases: Customers return to spend the balance, naturally boosting retention.‍
• Improves margins: Credit can be issued in small, controlled amounts vs. heavy discounting.‍
• Supports service recovery: Quick, frictionless issue resolution improves NPS and CSAT.‍
• Reduces return costs: Many brands offer extra credit when customers choose refund-as-credit, increasing profit per return.‍
• Aligns with loyalty mechanics: Points - Credit - Purchase creates a smooth loop that reduces breakage and increases LTV.

Store credit versus similar incentives

• ‍Store credit vs. coupon: Store credit behaves like cash; coupons apply discounts with strict rules.‍
• Store credit vs. gift card: Gift cards are prepaid balances with independent codes; store credit is tied to a customer identity.‍
• Store credit vs. loyalty points: Points are a soft currency requiring conversion; store credit is immediately spendable.

Store credit is the most liquid and flexible of the three.