Physical gift cards remain most popular, but annual growth in digital gift cards increases again, and in particular during COVID-19 pandemic

Findings from its 2019 national gift card distribution results have been finalized and released by NGC, one of North America’s largest card and prepaid technology companies responsible for annually activating over $600 million in gift cards and prepaid products for loyalty, rewards, and employee recognition programs.

Findings from its annual national gift card distribution results have been finalized and released by NGC, one of North America’s largest card and prepaid technology companies responsible for annually activating over $600 million in gift cards and prepaid products for loyalty, rewards, and employee recognition programs. Physical gift cards remain most popular, but annual growth in digital gift cards increases again, and in particular, during COVID-19 pandemic.

Trends from the annual distribution results show that big box retailers, open loop cards (such as Visa and American Express), and entertainment brands (such as Apple and Google Play) continue to be the most popular gift card and reward choices.

For the fifth consecutive year the big box retailer category, containing brands such as Walmart and Target, topped the list of NGC’s reward categories, with 31% of the total redemption volume in gift cards, a 1% increase from the previous year.

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In the second top ranked open loop category (such as Visa or American Express), NGC’s prepaid reward card products accounted for 20.5% of its gift card distribution volume. This includes both digital and physical forms of the Visa and American Express reward product through either a real-time gift card API service or physical shipments to businesses and consumers.

NGC’s full category rankings for B2B and B2B2C gift card distribution in 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%

In looking at specific gift card brands, Amazon became the top redeemer for NGC during 2019 with nearly 65% of those rewards being distributed digitally. Adding to the top tier for overall NGC redemptions were iTunes and Walmart, and Visa prepaid reward cards remained strong.

NGC’s Top 15 brand rankings for business-to-business (B2B) gift card distribution and redemption in 2019:

1. Amazon
2. iTunes
3. Walmart
4. Visa Rewards Cards
5. Target
6. American Express Rewards Cards
7. TJ Maxx
8. Macy’s
9. Panera Bread
10. American Express Business Gift Cards
11. Starbucks
12. Barnes & Noble
13. Lowes
14. Home Depot
15. Kohl’s

As for digital vs. physical gift card redemptions, digital card redemptions continued to show strong growth, increasing from 30% in 2018 to 45% in 2019. While many end consumers redeem points or miles for both digital and physical cards (39% according to a recent Incentive Magazine survey), both the larger industry and NGC specifically are seeing that physical gift cards continue to remain the preferred reward choice for consumers in 2019.

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“While this data is true for 2019, we’re already seeing a heavier shift to digital gift cards in Q2 of 2020 as many brick & mortar retailers and restaurants are closed or operating under limited hours during COVID-19,” says Eric Thiegs, Chief Revenue Office at NGC.  “Our gift card API and digital card offering are out-pacing the physical card distribution at the moment, and 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.”

To help companies support and thank employees and frontline workers during the COVID-19 crisis, NGC recently expanded its capabilities to include greeting cards and created an Essential Brands category of primarily digital eGift cards from merchants providing food, delivery, subscription, and household essentials.

Additionally, NGC also offers up its free, all-digital, ‘Benefit’ fundraising mobile app for nonprofit organizations looking to raise money simply by using its members’ usual shopping habits – all supported by NGC’s mobile gift card technology with real-time, merchant Point of Sale purchase experience. The Benefit app can be downloaded from the Apple and Android App Store.

“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.

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