What Are Digital Gift Cards [+How to Create One] - (2024)

Thanks to the rise of online shopping, digital gift cards have become an increasingly popular and convenient way of giving and receiving gifts.

Research indicates that the digital gift card market is rapidly growing and is expected to reach $495.05 billion in 2024, up from $418.74 billion in 2023, representing a compound annual growth rate of 18.2%.

As a result, many retailers have introduced digital gift cards as an alternative to physical gift cards.

But what are digital gift cards, and how do they work?

In this ultimate guide, we’ll explore everything you need to know about e-gift cards. We’ll cover their benefits and discuss how to use them effectively to boost customer loyalty.

Plus, we will explain how you can leverage PassKit to create, manage and distribute e-gift cards without custom app building or coding and design skills.

Let’s get started.

Understanding digital gift cards

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Digital gift cards, often called e-gift cards, are a modern take on gift cards in a physical form. Customers receive them electronically, usually through email, mobile app or mobile wallet.

How e-gift cards work

After a gift card purchase, customers receive digital codes usually sent to their specified email address. To use the e-gift, they can enter this unique gift code number when they purchase online or show it on their phone when shopping at a physical store that accepts digital codes.

For more information, read our guide on how e-gift cards work.

Digital gift card vs. physical gift card

The primary difference between digital and physical gift cards lies in their method of delivery and usage. Digital gift cards provide prompt delivery and convenience, eliminating the need for shipping and handling.

On the other hand, despite being tangible, physical cards remain a thing of the past, as they may incur additional charges and take longer to distribute.

Benefits of digital gift cards for businesses

Digital gift cards simplify the reward process for businesses by enabling easy distribution and management through electronic platforms. They eliminate logistical challenges and often provide better user engagement and campaign data tracking.

The customer’s perspective

Electronic gift cards offer an efficient, flexible, and secure gifting option. They are gaining popularity due to their ease of use and the variety of choices available.

These digital gift cards are more secure than physical ones as they can only be redeemed by the recipient, making them less susceptible to theft or loss.

The role of digital gift cards in customer loyalty

Digital gift cards are transforming customer loyalty by providing tailored rewards that incentivize shoppers to return, significantly impacting future purchases.

Encouraging repeat business

For retail stores, digital gift cards are a tool for not only appreciating customers but also nudging them towards repeat business. When customers receive a digital gift card, its value often prompts them to revisit the store.

This is especially true for online retailers, who provide a convenient way to shop without physical card management:

• Immediate gratification: Digital cards are immediately accessible, feeding the modern consumer’s desire for quick and efficient service.
• Personalized offers: Stores can use buying history to send personalized card values, increasing the appeal to individual customers.

Integration with loyalty programs

Integrating digital gift cards with existing customer incentive programs is straightforward. It encourages customers to earn points and rewards they can redeem for future purchases:

• Seamless transactions: The ease of using digital cards within mobile wallets ensures a frictionless experience.
• Increased engagement: Earning additional benefits through a loyalty program increases customer’s engagement with the retailer.

By adopting innovative loyalty solutions, retailers are syncing digital gifts and loyalty benefits, creating a cohesive and rewarding system for customers.

How to create digital gift cards for your business

Image source: Freepik

Choose the right platform

If you’re considering offering digital gift cards, the first step is to choose a platform that matches your business requirements.

Your chosen platform should integrate easily with your point-of-sale (POS) system, whether a comprehensive ecommerce solution or a specialized digital card service.

Look for eGift card features that enable you to customize and manage them smoothly within your current sales process.

Design your digital gift card

The design aspect is crucial—it represents your brand and attracts customers. Capitalize on creative freedom by tailoring the gift card’s design to reflect your business’s ethos and appeal to your target audience.

Remember to balance aesthetics and usability, ensuring the card information is easily accessible and understandable.

Set up your gift card program

To set up your program:

1. Begin by determining the card values and expiration policies. Certain prepaid gift cards charge a fee to buy them.
2. Implement a system where customers can purchase, send, and redeem egift cards effortlessly.
3. Consider incorporating automation to streamline the purchase and delivery process.

For instance, explore how Zapier automation can enhance the efficiency of your gift card incentive program. Integrations like these can assist with scheduling, reminders, or even sending special offers to gift card holders to encourage repeat business.

Remember, physical cards still exist in the market, but offering a digital form expands your reach. Customers value the ability to shop online and send gifts instantly, so you should extend your offerings to include both options.

PassKit is a loyalty platform provider that helps you create a comprehensive gift card program that caters to all customer preferences and seamlessly transitions between the physical and digital worlds.

Let’s explain how it works.

How to create a digital gift card with PassKit

PassKit is the leading mobile wallet service provider. It helps you incorporate Apple and Google Wallet passes into your brand’s mobile experiences to better connect with your customers. It enables you to boost customer engagement, improve loyalty, and simplify operations.

Designing digital gift cards can significantly enhance your customer’s shopping experience and effectively drive sales. PassKit helps you create these cards in a few simple steps:

1. Register with PassKit: You can start a 45-day free trial to test all features. When the trial expires, you can subscribe to our pay-as-you-grow plan, which starts at $39.50 monthly. You will also receive discounts as your usage increases.
2. Navigate the dashboard: The system will redirect you to the PassKit dashboard after logging in. This user-friendly interface is your command center for creating, managing and distributing digital gift cards.
3. Design your e-gift card: Use the Pass Designer, our intuitive visual editor, to begin the creation process. Select your desired loyalty card template and start adjusting it to your needs.
4. Implement brand identity: Highlight visual elements by adding your logo, hero image and color scheme to promote brand recognition and trust.
5. Personalize cards: Use PassKit’s advanced fields to add recipients’ information, such as their name, birthdate, phone number and email or add custom fields to collect customer data during the enrollment process.
6. Add a barcode: Track usage easily through secure e gift card code generation and a hassle-free redemption process. When customers present their digital gift card at your store, you can quickly scan it using the PassReader app for iOS and Android.
7. Outline policies: Clearly define the terms and conditions for your e-gift cards. It includes setting an expiration date, if any, and outlining specific restrictions. Transparency in these policies is crucial to prevent confusion and ensure a positive customer experience.
8. Distribute your cards: Promote your cards through various online and offline channels. Make them available on your website, announce them on your social media platforms, and even consider in-store signage if you have physical retail locations. The goal is to make your customers aware of this convenient option.
9. Get data: With PassKit’s analytics tools, you can monitor the performance of your e-gift cards. You can track sales, redemption rates and ROI and gather insights into customer purchasing patterns to optimize future marketing strategies.

By following these steps, you can seamlessly integrate e-gift cards into your business model, providing a flexible and desirable option for your customers that can help boost both satisfaction and revenue.

Start a 45-day free trial and experience the PassKit platform firsthand.

Promoting your digital gift cards with PassKit

PassKit helps you boost the visibility and sales of your digital gift cards by effectively leveraging online and offline marketing channels. Here are some ideas to get you started.

Online promotions:

• Engage in email marketing campaigns highlighting the benefits of gifting flexibility and convenience.
• Use social media platforms to showcase these cards as an appropriate gift for any occasion, reminding followers of the easy way to delight the gift card’s recipient.

Offline marketing techniques:

• In your physical locations, display signage that invites customers to learn more about your digital offerings.
• Train staff to mention the availability and benefits of gift cards during checkout, fostering an opportunity for last-minute purchases.

Remember:

• Including information when gift cards expire in all promotional materials is important to ensure transparency.
• Coordinate sales events that feature gift cards, precisely positioning them as a strategic part of your marketing portfolio.

Driving digital gift card sales requires a mix of strategic promotions across channels where your customers are most active. You’ll successfully promote your gift card program by being transparent with your communication and creative with your marketing methods.

Managing and tracking your digital gift card program

Tracking sales and redemption rates is fundamental to ensuring the success of your digital gift card program. You should monitor peak selling times and redemption patterns to adapt your marketing strategies accordingly.

Using comprehensive gift card management software like PassKit, you can access real-time data that helps you understand customer purchasing behaviors.

This visibility allows for the following:

• Adjusting discounts or promotions based on sales trends
• Identifying which cards are most popular among your customers
• Forecasting for future card designs and rewards

Integrating with your POS and CRM systems

You can use PassKit to integrate your digital gift card program with your Point of Sale (POS) and Customer Relationship Management (CRM) systems for seamless operation.

This integration ensures:

• Gift cards are easily redeemable at checkout
• Sales linked to gift cards are tracked back to specific marketing campaigns
• Customers’ gift card balances are updated in real-time

Integration is crucial for a cohesive customer experience. It’s not just about the sale. It’s about creating a cycle of loyalty and engagement with your brand.

In the current landscape of digital payments, a robust gift card program can significantly contribute to your financial success.

With careful management and precise tracking, you can ensure that your digital gift cards are more than just a convenient gift—they’re a powerful tool for sustained business growth.

Best practices for digital gift card programs

Ensuring a seamless and secure customer experience is paramount when managing digital gift card programs. Consider the following best practices as you develop and refine your offerings:

1. Optimize for usability: Ensure your digital gift cards are easily accessible and redeemable across devices. Straightforward navigation and a quick redemption process increase customer satisfaction.
2. Personalization options: Allowing customers to personalize their gift cards with messages or choosing designs adds a thoughtful touch, enhancing the gifting experience.
3. Security measures: Implement robust security protocols to protect against fraud. It includes secure delivery methods and tracking and deactivating lost or stolen cards.
4. No hidden fees: Be transparent with customers about any costs associated with your prepaid gift cards. Eliminating unwanted surprises like inactivity fees can build trust and encourage repeat purchases.
5. Multi-channel availability: Sell digital gift cards through various channels, such as your website, in-store, or third-party marketplaces, to maximize reach and convenience.

Final words about e-gift cards

Digital gift cards have become an increasingly popular way of gifting. They offer convenience, flexibility, and ease of use, making them an excellent option for both givers and receivers. However, it’s important to have the right software to create and manage e-gift cards effectively.

PassKit is one such software that stands out among its competitors. It offers an intuitive platform for creating, distributing, and managing digital gift cards.

With its user-friendly interface and robust features, PassKit simplifies the process of creating and delivering e-gift cards while also providing valuable insights into customer behavior and preferences.

If you’re looking to streamline your e-gift card process and provide a seamless experience for your customers, PassKit is the perfect solution.

And with a 45-day free trial available, there’s no reason not to try it. Sign up today and see how PassKit can boost your e-gift card game.

FAQs about e-gift cards

How do digital gift cards work?

Digital gift cards, also known as e-gift cards, are sent to you electronically, commonly via email or a mobile app. You receive a code, typically alongside instructions on how to use it online or in-store.

Simply enter the card’s code at checkout or present it to the cashier to deduct the gift card value from your purchase total.

What is the difference between a gift card and an eGift card?

The primary distinction lies in the format.

A gift card is physical, often plastic, and can be used at the issuing store or a group of associated retailers (a closed loop card).

An eGift card is electronic and can be used online or in-store with a code. Some eGift cards are open loop, meaning they can be used across a wider range of locations.

Are digital gift cards safer?

E-gift cards are considered safer than physical cards because they don’t require physical handling or shipping, reducing the risk of being lost or stolen.

As they’re often emailed or loaded into a mobile app, the safety of your e-gift card depends on the security of your digital accounts.

Why do people buy digital cards?

People opt for digital cards for convenience and speed. They can be bought and sent instantly without the need for shipping. They are also eco-friendly, eliminating the need for plastic.

Digital cards provide an easy way to gift. This is especially helpful when you’re short on time or if the recipient lives far away.

What is an open loop gift card?

An open-loop gift card is a type of gift card that can be used at various merchants rather than just one specific store or chain.

These gift cards typically have a major credit card company logo on them, such as Visa, Mastercard, or American Express.

You can use them anywhere that accepts that particular debit card, making them a versatile gift option for a wide variety of purchases.