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The Giftbit Blog | Digital Gift Cards, Rewards, and Incentives

Choose The Right Type of Gift Card For Reward & Payout Programs

Written by Giftbit | January 14, 2025
🔎 Types of cards covered in this article:
 
💳 Digital gift cards (eGifts) & physical cards: digital cards deliver immediately at minimal cost, while physical cards offer tangible appeal

💳 Open-Loop & closed-loop: open‑loop cards work anywhere a network is accepted; closed‑loop cards focus spending at one brand

đź’ł Full choice & single brand gift cards: use full-choice cards to give broad selection, while single-brand cards reinforce specific goals

đź’ł Expiring & non-expiring: different options to allow for timeless flexibility or to drive fast action

Though they may look straightforward, the types of gift cards on the market today are surprisingly varied. 

From physical and bulk digital cards to open-loop and closed-loop options, each type offers its own benefits and audience fit. They can be customized, combined, and distributed in all sorts of ways to match your unique business goals.

Choosing the right option can certainly feel overwhelming. Narrowing down what works best for you often depends on cost, convenience, and the preferences of the people you’re rewarding. In this article, we’ll help you do just that, so you can use the right type of gift cards to take your reward program to the next level.

The types of gift cards available for businesses

Gift cards have become a go-to solution for many reward and payout programs, but there’s no one-size-fits-all approach. With so many types available, it's easy to get lost in the weeds. 

The following are the main distinctions between all these options—along with tips to choose the right type for your business needs.

→ Jump to the gift card brands that are most popular with recipients

Physical gift cards vs. digital gift cards

At the most basic level, gift cards fall into one of two categories: physical or digital. In most cases, you’ll choose between them based on the experience you want to offer, along with the logistics you’re willing (and able) to handle.

Some people still enjoy physical gift cards, and they can be the right choice for certain programs and audiences.

But it costs between $.65 and $1.25 just to manufacture, encode, and ship a plastic gift card. So if you work with a gift card distributor, they'll simply have to charge more for physical options than digital.  

Further complicating things, processing and shipping physical cards can take several days or even weeks.

And of course, there’s always the risk that they get lost in the mail.

For these reasons, gift card programs that rely on physical gift cards and gift certificates often need to use higher reward amounts to keep engagement high. A recipient’s not going to be that excited to just wait around for a $5 reward.

In contrast, using digital rewards (i.e., e-gift cards) provides several key benefits:

  • Immediate delivery

  • Unconstrained reward amounts (i.e., feel free to send low denomination gift cards, even those worth just a penny!)

  • Ability to automate and scale programs

Ultimately, a successful reward or incentive program comes down to engagement and behavior change. Companies generally use them to meet a business goal, like improved employee engagement or sales enablement.

And most of the time, electronic gift cards are simply the best way to reach those goals.

That said, your audience may simply prefer or require physical gift cards. For example, if your audience isn't online very much, they might not want something that needs to be redeemed online. 

Remember, too, that physical gift cards can often be used online, while digital gift cards can often be used in brick-and-mortar locations (i.e., this distinction is primarily about gift card distribution itself). 

For example, an Apple gift card from Giftbit gives the recipient to option to spend their reward in Apple Store, apple.com, in the Apple Store app, the App Store, iTunes, Apple Music, Apple TV+, Apple News+, Apple Books, Apple Arcade, iCloud+, Fitness+, Apple One, and other Apple properties (phew).

Open-loop vs. closed-loop (i.e., prepaid cards vs gift cards)