Digital Gift Card Usage Rises During Pandemic

The NGC survey also revealed the top gift card categories for 2019.

With the COVID-19 pandemic disrupting how incentives are delivered to recipients, there has been a significant uptick in companies using digital gift cards as rewards, according to new findings from prepaid technology company NGC

In its annual survey of gift card usage in B2B incentive programs, the company's chief revenue officer, Eric Thiegs, reported that "we're already seeing a heavier shift to digital gift cards in Q2 of 2020 as many brick-and-mortar retailers and restaurants are closed or operating under limited hours during COVID-19." He added that at press time, digital card offerings are out-pacing physical card distribution. "We'll see how the numbers come out at the end of the year, as both consumers and brands find their footing through the pandemic," added Thiegs.

This continued a trend that NGC had already noted last year. According to NGC, digital card redemptions rose from 30 percent of the total cards redeemed by its B2B customers in 2018 to 45 percent in 2019. 

The survey also looked at which categories of gift card were most preferred by B2B customers, and found big box retailers (which includes brands such as Walmart and Target) to be the top category, with 31 percent of the total redemption volume in gift cards. This is a 1 percent increase for the category from the previous year and the fifth consecutive year in which it has topped NGC's list. It was followed by open-loop cards (such as those branded with Visa or American Express) at 20.5 percent, entertainment cards at 17 percent and department stores with just 6.1 percent.

Top gift card categories for 2019:

  1. Big Box Retailers - 31%
  2. Open Loop - 20.5%
  3. Entertainment - 17%
  4. Department Stores  - 6.1%
  5. Quick Service - 4.4%
  6. Canadian Cards - 3.9%
  7. Specialty - 3.2%
  8. Gas/Automotive - 2.9%
  9. Apparel - 2.5 %
  10. Casual Dining - 2.3%
  11. Grocery/Pharmacy - 2.2%
  12. Home Improvement - 1.9%
  13. Travel – 1.2%
  14. Sports & Wellness - 0.8%

The report also broke down findings by top brands. Amazon was by far the top redeemer, accounting for nearly 65 percent of NGC's digital rewards. This was followed by iTunes and Walmart.

To respond to the growth in digital redemptions, the company has begun to offer greeting cards and created an Essential Brands category of primarily digital eGift cards from merchants providing food, delivery, subscription and household essentials. The organization also is offering up its free Benefit fundraising mobile app to nonprofit organizations looking to raise money. 

"We've fast tracked the launch and enhancement of several of these capabilities and efforts to help companies and consumers during the current health crisis," Thiegs noted.