Physical vs digital gift cards: Why offering both is necessary for business success

In spite of unpredictable markets and sluggish economies, 2023 saw 69% of consumers purchase the same amount in gift cards or more compared to 2022, with 40% putting at least $50 on gift cards–that’s a 33% increase from 2022. What’s more, a whopping 79% of consumers say they’ll spend more than the value of the gift card at a retailer.² 

It’s prime time for gift cards. And that means small businesses should capitalize on the global gift card trend by offering consumers physical and digital gift cards. So, why the need for both physical and digital gift card formats?

Consumers are generally split 50/50 on their preference for digital and physical gift cards. Read on for more information about each type of gift card and why both options can benefit  your business.

READ: 4 advantages of gift cards

What is a physical gift card?

Physical gift cards can be loaded, and sometimes reloaded, with cash value and used as a cash equivalent to make in-store and online purchases. 

The most significant reason why many consumers lean towards physical gift cards is tangibility–they can be held, wrapped, packaged, and stored just like any other physical item.  To that point, a recent Fiserv consumer survey found that 85% of participants like the idea of giving an actual card or gift and 52% want the recipient to unwrap a gift.³

READ: How to boost gift card sales

Benefits of physical gift cards

In addition to tangibility, physical gift cards offer some stand-out benefits to consumers and businesses. Here are five, for starters.

1. Flexibility: Designed for in-store or online use, physical cards can be used as gifts, store credits, or incentives for customers and employees. What’s more, as many as 55% of consumers buy gift cards for themselves.³
2. Ease: Some consumers find buying physical gift cards easier than purchasing a digital gift card online, as 25% of the Fiserv survey participants shared.³
3. Durability: With normal handling, physical gift cards often outlast the expiration date, if any, on their cash value. That makes them a great alternative to paper cash. 
4. Branding: They can be designed with a company’s unique brand–that means, recipients have your brand in-hand and top of mind anytime they see or use that card. 
5. Security: Unlike debit and credit cards, physical gift cards are not as susceptible to online scams, digital theft, or ID theft. Even if they’re stolen, the value stolen is limited to the cash value of the card. 

What is a digital gift card?

Digital gift cards have no physical form. Instead, a digital gift card is a unique code or number that’s issued to a customer for making purchases at online or brick-and-mortar retailers. What’s more, they offer givers instant, or near-instant, delivery to the recipient.

Speed and agility are the preeminent reasons many consumers prefer digital cards to physical cards. Sending and delivering a digital card is typically faster than locating,  packaging, and sending physical cards and can be done on-the-go, anytime, and from just about any device. 

Case in point, in a recent survey sponsored by Fiserv, 63% of participants said they preferred digital gift cards to physical cards because of immediate delivery, 53% said they’re easier to send than mailing physical cards, and 50% said they’re easier to purchase than physical cards.³ Even better, digital cards can be sent by email or SMS text, making them just about universally accessible.

Benefits of digital gift cards

Beyond speed and agility, digital gift cards offer these perks to consumers and businesses. 

1. Simplicity: With no postage required and almost immediate delivery, digital gift cards are a cinch to send. And, there’s less room for error when sending. Digital cards require less recipient information to send—typically just a name, email address, or mobile number. And, if the giver mistakenly sends the card to the wrong email address or phone number, for instance, the giver’s more likely to find the error sooner than if sending a physical gift to the wrong physical address via mail—thanks to send and delivery confirmations.
2. Self-service: Because they can be purchased online, anytime, anywhere, digital gift cards give the consumer more control over when the purchase is made and delivered–especially online. For your staff, less transactional time spent on gift cards can mean more time available for other consumer transactions.
3. Tracking: Since each digital gift card is given a unique gift code, tracking digital gift card sales and redemption can be simpler than with traditional gift cards. Even better, as long as the recipient has the unique card code, no digital card is actually needed to complete the transaction.
4. Eco-friendly: Digital gift cards have no physical form, so there’s no physical waste. No waste means little to no impact on the environment.
5. Cost-savings: Short of the initial cost to design an email template to deliver them, digital gift cards are zero-cost to generate and deliver. 

READ: How these Clover merchants are using gift cards

Give your customers gift card options

Both physical and digital gift cards can help boost sales, reduce fraud, and simplify the gift-giving and purchasing process. Businesses can get the most out of gift card sales by offering both digital and physical card options and letting their customers choose the format they prefer.

Clover makes managing a physical and digital gift card program simple, speedy, and efficient. Clover Gift Cards are available through your Clover device dashboard and offer over 70 design templates to choose from. Or, you can upload your own custom-branded design. You have instant access to self-service Clover Gift Card ordering and can track gift card sales and redemptions easily with Clover Gift Card reports.

Already have a gift card program? Converting an existing program to Clover Gift Cards is a snap. And, a Clover Business Consultant is always standing by with a helping hand. 

1 https://capitaloneshopping.com/research/gift-card-statistics/

2 https://www.persistencemarketresearch.com/market-research/gift-card-market.asp

3 https://www.carat.fiserv.com/content/dam/carat/us/en/pdf/annual-prepaid-consumer-insights-survey-2024.pdf

Editorial Team

Gift cards, Insights, Retail, Run your business

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