How much revenue does a digital gift card actually generate?

Far more than just a prepaid payment method, gift cards have become a strategic economic lever for retailers. They generate immediate revenue, enhance customer acquisition and retention, and improve cash flow. Through various financial mechanisms, gift cards help optimize working capital, increase average order value, and attract new consumer segments.

Let’s take a closer look at the economic impact of a well-structured gift card program.

Immediate revenue and optimized cash flow

When a customer purchases a gift card, the retailer receives the payment upfront—long before the product or service is redeemed. This financial advantage provides valuable flexibility, allowing businesses to strengthen their working capital, a key indicator of financial health.

On average, a gift card is redeemed 50 days after purchase, giving the retailer a cash flow boost that can be reinvested in operations, inventory, or marketing. In the current economic climate, where brands are focusing on securing liquidity, this early cash inflow is particularly beneficial.

A powerful tool to increase average basket size

Gift card holders often spend more than the loaded amount. On average, 57% of users make an additional payment, with an extra €46 per transaction.

In certain sectors, such as luxury, fashion, and high-tech, this additional spending can reach up to 40% of the original gift card value.

Retailers leverage this behavior through strategic marketing initiatives, including:

• Gift Card Promotions – For example, offering a €50 gift card for €40 encourages higher adoption rates and boosts engagement.
• Loyalty Programs – Brands like Decathlon allow customers to convert loyalty points into gift cards, creating a virtuous cycle that reinforces brand loyalty and in-house consumption.
• Reactivating Dormant Customers – Sending an e-gift card to inactive customers can entice them to return and spend beyond the card’s value, revitalizing engagement.

Unused gift cards: a hidden source of profit

Another significant revenue stream comes from unused or partially redeemed gift cards.

On average, 10% of sold gift cards are never fully redeemed, either due to forgetfulness or small remaining balances left on the card. At the end of the year, these unclaimed amounts are recorded as exceptional revenue, generating additional profit for the retailer.

A high-performance customer acquisition & retention tool

Gift cards offer a powerful opportunity for brands to acquire new customers at a lower cost. Unlike traditional advertising expenses, gift cards work as a natural recommendation system—when a customer gives a gift card, they are essentially inviting someone to discover the brand.

• Lower acquisition cost – A gift card costs 2 to 3 times less than an acquisition campaign through digital advertising.
• Increased brand visibility – 62% of consumers have purchased a gift card before, and 59% would like to receive one, according to a recent study.
• Viral effect – Every distributed gift card represents a potential loyal customer if the shopping experience is positive.

The initial gift card purchase already generates revenue for the brand, but its true potential lies in turning first-time buyers into repeat customers. By enhancing the customer experience and integrating loyalty programs, retailers can extend customer lifetime value (CLV)—the total profit generated over the course of a customer's relationship with the brand.Furthermore, gift card revenue can be significantly amplified if brands expand sales to external distribution channels. Through a network of partners and third-party distributors, brands can increase visibility and reach new audiences. 

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The booming B2B gift card market

The gift card industry is no longer limited to individual consumers. Today, B2B accounts for two-thirds of all gift card sales, making it a key driver of market growth.

From incentive programs to corporate holiday gifts, HR departments and employee committees (CSEs) are actively seeking reward solutions, with digital gift cards becoming a preferred choice. By integrating into corporate rewards catalogs, brands gain direct access to employees across various industries, unlocking a new and substantial revenue stream.

For example, if a large company invests €100,000 in gift cards for its employees, this amount is immediately recorded as revenue for the brand, with a high likelihood of additional spending on top of the gift card value.

Costs to consider

While gift cards generate significant revenue, it is essential to manage hidden costs to ensure profitability. Key cost factors include:

• Cost of goods/services – Ensure that margins on gift card sales remain profitable compared to regular product sales.
• Commissions & discounts – B2B partners and distributors take a commission for distributing gift cards, reducing net margins.
• Supplier fees – Includes technical costs for payment processors, management platforms, and aggregation solutions.
• Physical card production – Manufacturing and distribution costs, though minimized through digitalization.
• Marketing & advertising – Retailers must invest in promoting their gift card programs to maximize adoption.
• Customer support – An often underestimated cost, but crucial for handling inquiries and resolving issues related to gift card usage.

A strategic yet underutilized economic tool

Gift cards are far more than just a transactional product—they present a triple opportunity for retailers: cash flow optimization, revenue growth, and cost-effective customer acquisition.

Why are brands investing heavily in gift cards?

• Immediate revenue collection, improving working capital.
• Additional spending from gift card holders.
• Indirect revenue from unused balances.
• Low-cost customer acquisition and retention.
• B2B development as the primary market growth driver.

Retailers that structure their gift card programs strategically will gain a competitive edge, unlocking sustainable revenue streams in both B2C and B2B segments. 

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