California's gift card cash-out threshold just jumped to $15. Here's what changes at checkout
By Yan Payments
What actually changed
If you sell gift cards in California, whether it’s a laminated card behind the register or an e-gift card you email out, the rule on when you have to hand back cash instead of store credit just moved. Since April 1, 2026, any gift card with a remaining balance under $15 is redeemable for cash if the customer asks for it. The old line was $10, and it had been $10 since 2008. Senate Bill 22 raised it, and just as important, it now explicitly covers electronic gift cards, not just the physical kind.
This isn’t optional and it isn’t something you can get around with fine print on the back of the card. It’s California Civil Code Section 1749.5, and it makes California’s cash-out threshold the highest in the country. Gift card issuers who don’t honor a cash request on a qualifying balance are exposed to the same kind of consumer-protection claims that have already produced lawsuits against national retailers under the old $10 rule. Plaintiffs’ attorneys were watching the April 1 effective date closely, according to legal trade coverage, which tells you this isn’t a rule regulators quietly forget to enforce.
A worked example
Say a customer bought a $50 gift card at your restaurant, used it over a few visits, and has $12 left on it. Before April 1, you could tell them the remaining $12 has to be spent in-store. Now, if they ask, you owe them $12 in cash, or a check, or whatever form of payment you both agree counts. A $16 balance still doesn’t qualify since it’s above the line. Anything under $15 does. That’s the whole test: the dollar amount of the remaining balance, nothing about how the card was purchased, promoted, or what the fine print says.
Who this affects
Any retailer or restaurant that sells gift cards through the register, online, or bundled into a promotion is covered. It applies whether the card was issued under your own store program or through a third-party gift card platform, and it covers both plastic cards and electronic ones. So if you sell e-gift cards through your website or a Clover gift card app, the same $15 threshold applies to those balances too, not just the cards printed on plastic.
There’s one carve-out worth knowing: gift cards donated to a nonprofit or charitable organization are exempt from the cash-out requirement, as long as the card is marked as not redeemable for cash at the time it’s donated.
It’s also worth separating this from a different question merchants sometimes confuse it with: whether a gift card can expire. Under existing California law, most gift certificates sold to consumers can’t have an expiration date at all, separate from the cash-out rule SB 22 changes. SB 22 doesn’t touch expiration. It only changes the dollar line for when a remaining balance has to be paid out in cash instead of store credit.
Transitional relief if you already printed cards
If you’ve got a stack of physical gift cards already printed with the old $10 language, you don’t have to throw them out. The law gives issuers until December 31, 2028 to sell through existing inventory printed with the $10 threshold, as long as you meet notice and recordkeeping requirements and can document when the cards were manufactured. New cards you order or print going forward should reflect the $15 threshold instead.
What to update before your next gift card sale
- Update any printed language on new gift cards, receipts, or your website that still references the old $10 cash-out line.
- Walk your staff through the new threshold so nobody tells a customer “we don’t do cash back on gift cards” when the balance actually qualifies.
- Check your POS gift card settings so a cash-out request can actually be processed at the register, rather than needing a manager override or a call to corporate every time.
- If you sell e-gift cards online, confirm your platform can issue a cash refund or ACH payment for balances under $15, not just more store credit.
Getting this wrong isn’t necessarily a huge fine on its own, but it’s the kind of small, easily fixed compliance gap that turns into a class action once enough customers hit it. A short conversation with your staff this week is a lot cheaper than finding out the hard way later.
If you want help checking how your Clover gift card settings handle cash-out requests, talk to a payments expert.
This is general information, not legal advice. Talk to an attorney about how SB 22 applies to your specific gift card program.
Sources
← Back to all posts