By Todd Tomlin, Co-Founder and COO, Ncentiva
The gift card and loyalty industry is growing at an exponential rate. Reports predict an overall market growth of 14.2% and a worth of $724.3 billion by 20281. With so much competition offering gift cards to businesses for engagement, incentive, and reward programs, the need for innovation is vital. Whether to differentiate oneself, or to meet new consumer demands, the industry must diversify from the traditional channels and avenues that were once enough.
Traditionally gift card distribution falls in two markets – B2B and B2C – that are further sub categorised into various use cases: incentives; engagement; loyalty; gifting. However, in recent years, those use cases have increased to include audiences and purposes that had never previously been identified or required.
Initially brought to light by the pandemic, the market for ‘government to consumer (G2C)’ has erupted on a global scale. Suddenly, the use of gift cards as disbursements became the quickest, most compliant way for authorities to distribute much-needed hand-outs to vulnerable families and individuals. The ability to order online at speed and scale, and then track each separate digital gift card code was appealing in a crisis that effectively prohibited any existing physical gift card fulfilment/funding. The added functionality offered by many businesses to include an element of choice for the end recipient provided a new, much-needed dimension for the process of disbursement.
This tactical reaction to the new needs of the global audience has sparked further thinking and innovation. Now, we are seeing gift cards used as a payment mechanism by brands and corporations. Rather than payments made via bank transfer that are rarely acknowledged (or appreciated) by the recipient, compensation or reward can be made into a much more positive affair. This approach can turn around a potentially negative transaction, and in some cases can even form a meaningful touchpoint with a customer.
A marked benefit of utilising a gift card for pay-outs relates to the direct cost of making payment. Traditional forms of compensation usually incur taxes, and financial law often differs in each region, country, and state, making it difficult for payments to be centrally managed. Gift cards on the other hand can be purchased either at face value or, in some cases, at a discount. This effectively makes a pay-out ‘cheaper’ for the business or brand, while the end recipient benefits from the full value they are owed.
Gift card platforms offer flexibility, choice, and ease of management, as items can be ordered in bulk or on an ad hoc basis, physically or digitally, with and without personalisation. The potential of converting more and more businesses to this method of pay-out could unlock billions of dollars for the industry.
Gift card distributors are already providing content that can be used in this format, but as demand adapts again, they’ll need to convert to the wider concept of ‘payment solutions’. A variety of ways to pay and redeem must be offered so that one provider can be the central one-stop-shop for any given client. The aim should be a holistic platform that can accept (and provide access to) crypto, allow balances to be converted to charitable donations, and still service standard pay-out methods.
At Ncentiva, we’ve always offered a slightly different proposition with our electronic device trade-in scheme. It was what primarily made us different from our competitors. But one string to the bow is not an option in this great industry of ours.
By developing our own full-service alternative pay-outs solution (and facilitating the plug-in of our platform into others’ existing solutions), we’re able to recognize new needs and pivot accordingly to meet them.
Launched in March 2023, the Ncentiva platform allows an end user to login and select the pay-out function that best suits them.
- Our extensive gift card catalogue boasts relationships with vendors and brands all over the world. We utilise a model that allows us to pass on the wholesale price of certain branded gift cards to our users. This allows both the company making the payment AND the end recipient to benefit from up to 10% extra on the face value of each card.
This results in cheaper pay-out costs for the company and either full or over payment for the payee. We, the company, and the consumer share in the altruistic added value benefit this provides, which helps offsets the ever-rising cost of living.
- Supporting charitable donations is a growing demand, with a 2022 study2 finding that 40% of loyalty program members find giving something back an appealing idea. This figure rises to 65% amongst Gen Z. With lots of charity aggregators out there, there’s no excuse not to integrate some social good into a loyalty program. Our platform allows consumers to distribute their funds to over 1.8 million charities.
- 2023 will finally see cryptocurrencies hit the mainstream3. Adoption of (at the very least) BitCoin by retail giants, such as Amazon and Starbucks, has increased the acceptance of digital currency. As this trend is expected to continue on an upward trajectory, it seems fundamental to provide redemption functionality that meets and keeps up with consumer desires and behaviour.
- Finally, there must still remain provision for the traditional methods of payment. By integrating with banking institutions, it is possible to facilitate funds disbursement on the same platform as all the other options.
There are many use cases for the Ncentiva platform. In addition to B2B, B2C, and G2C payment processes, we continue to offer our electronic device trade-in scheme to employee and consumer programs as a bespoke white-label solution.
Find out more about housing your end-to-end disbursement needs on one, easy to setup platform.
In conclusion, to leverage the global market and take your share of that forecasted $700bn+, you must service multiple use cases and provide a package of solutions to suit a multitude of simultaneous customer requirements. Forging the right partnerships across the globe, pivoting to meet the next behavioural demand, and offering excellent value for your proposition, should guarantee your continued space at the table.
