Where gift cards fall short — and how partners can help

Bill Warshauer is chief revenue officer at Tillo, where he leads global revenue strategy across gift card and incentive distribution.

It’s every shopper’s nightmare: They’re standing at the register, a line behind them, and they can’t get their gift card to work. This pressure is felt even more acutely during the holiday season, when queues are longer and patience can wear thin. 

Gift cards are everywhere, yet the experience often fails when it matters most. As they move from simple retail transactions into B2B incentives and digital distribution, fragmented standards and disconnected partners are turning a high-value product into a frequent point of failure. Fixing the gift card UX is as much about innovation as it is about coordination across the ecosystem.

Regardless of the payment type, every brand is trying to figure out how to meet customer demands for a simpler checkout experience at all times of the year. But despite all the innovations in the industry, pulling out a gift card can still feel as archaic as taking out a checkbook. Shoppers are inherently afraid of slowing others down, and often nervous about whether the retailer will even accept the gift card in the first place. 

Much of this is due to a lack of common industry standards. Every time a customer wants to buy or redeem a gift card, it’s a different process. But as the industry evolves beyond the historic direct-to-consumer sales model, it’s amping up pressure on merchants and platforms alike to create a unified approach. 

Increasingly, companies are deploying a business-to-business (B2B) approach to gift card sales, such as using them for rewards and incentive programs. It’s quickly become a powerful and differentiated way to attract new clients and build loyalty among existing customers. Unlike with mass advertising, companies can easily tie the dollars invested in B2B gift cards back to specific consumer actions to judge how well campaigns may have done in boosting overall sales. And the digital transaction data can help enterprises target more specific audiences with personalized offers. 

To truly become an effective means of growing the business, the focus must be on simplifying how customers buy, access and redeem gift cards. Research shows that when shoppers choose a gift card, ease of use and flexibility are at the top of their wish list, with 57% and 51% of respondents citing them as most important. The brands that deliver on these core needs will not only sell more cards, but also create stronger, longer-lasting relationships with their customers. 

Here’s how companies can eliminate friction for both consumers and partners to deliver the experience customers expect. 

Where friction exists

When it comes to gift cards, there’s no common “structure” merchants adhere to. For example, while some retailers enable gift cards to be tokenized on a digital wallet, others don’t. There’s no consistent way to check card balances. Even the placement of the bar code on the digital gift card can vary wildly. And there’s no rhyme or reason to these discrepancies, either. As a result, too often, consumers struggle to understand unclear instructions and navigate too many steps. 

Meanwhile, retailers, issuers, and platforms may need to partner with multiple companies to launch digital gift cards on a new e-commerce platform and distribute them through a third-party marketplace. This slows down time to market and makes scaling harder. Tracking orders, payments, and usage across partners is time-consuming and error-prone. Selling digital gift cards into unknown or unvetted platforms also exposes brands to scams and misuse.

Opportunities for partners to collaborate with technology providers

What merchants need is a neutral platform that can connect brands to B2B partners in a simple, secure way. Technology providers empower companies to scale gift card distribution without added complexity, while enabling distributors to access a wide range of gift cards through a single, secure, real-time automated platform.

The benefits of working with a tech provider include the ability to: 

• Harness the power of diversified digital assets tailored to fit every unique need and strategy

• Cultivate meaningful collaborations, gain insights, and elevate business partnerships to new heights

• Engage consumers with intuitive solutions that offer unparalleled choice, and deliver unforgettable experiences

For example, when consumers purchase gift cards at brick-and-mortar locations, brands have little knowledge about the buyer or the recipient. That’s not the case in the B2B world. With the right technology platform to support gift card distribution, companies gain more data-rich insights into who is buying cards, which customer cohorts they fall into, and whether those buyers align with their ideal client profiles.  

Fixing customer experiences is a shared responsibility

The gift card ecosystem is full of friction for both end users and brands, largely because the right technology isn’t in place. 

Partners across the ecosystem must collaborate to address these gaps and, in doing so, unlock new loyalty, revenue and engagement opportunities. For example, technology providers can work with associations like Incentive Marketing Association (IMA) to develop a more consistent card characteristic that incorporates common tokenization protocols or barcode placement. 

As consumer demands continue to shape the gift card ecosystem, businesses must quickly adapt and provide to meet their needs. Those that overlook technology’s role in meeting these expectations will struggle to stand out in today’s hyper-competitive markets.