The Rising Power of Digital Gift Cards: Transforming Retail Strategies

Table of Contents

1. Key Highlights:
2. Introduction
3. The Evolution of Digital Gift Cards
4. Top Performers and What Sets Them Apart
5. Key Findings Retailers Need to Know
6. Vertical Performance and Growth Opportunities
7. Best Practices for Elevating Gift Card Programs
8. A Strategic Lever for Revenue Growth
9. FAQ

Key Highlights:

• The digital gift card market in Australia is projected to reach AU$6.5 billion by 2028, outpacing physical card sales.
• Top-performing retailers, including Amazon and JB Hi-Fi, excel due to mobile-first strategies and innovative customer experiences.
• Implementing best practices and vertical-specific strategies can significantly enhance gift card program performance.

Introduction

In an era where consumer expectations are rapidly evolving, retailers are constantly seeking innovative ways to drive sales and enhance customer loyalty. Among the myriad of strategies available, one channel stands out for its remarkable growth potential: digital gift cards. According to the latest insights from the 2025 Best Digital Gift Card Programs (Australian Edition) report, conducted by NAPCO Research and Blackhawk Network, digital gift cards have transcended their traditional role as mere convenience items. They are now recognized as a vital revenue channel with substantial implications for customer experience, brand loyalty, and retail innovation.

As the digital gift card market is projected to soar to AU$6.5 billion by 2028, understanding the dynamics that drive success in this sector becomes increasingly crucial for retailers. This article delves into the key findings of the report, highlighting the top performers, essential practices for improvement, and strategic insights that can help retailers harness the full potential of digital gift cards.

The Evolution of Digital Gift Cards

Digital gift cards have undergone a significant transformation. Once considered a simple token of appreciation, they are now integral to a comprehensive retail strategy. The growing preference for digital transactions, alongside the impact of the COVID-19 pandemic, has accelerated this shift. As consumers embrace the convenience of online shopping, the demand for digital gift cards has surged, leading to unprecedented growth in the sector.

Retailers can no longer view gift cards as an afterthought; instead, they must be strategically positioned within the broader context of digital commerce. This evolution is exemplified by the findings of the report, which evaluated 50 Australian merchants across ten retail verticals based on 128 criteria. The results underscore the importance of innovative digital gift card programs that elevate customer experience and drive sales.

Top Performers and What Sets Them Apart

The report identifies the top five brands excelling in the digital gift card arena: Amazon, Endota, JB Hi-Fi, Rebel, and Red Balloon. Each of these retailers achieved remarkable scores, with Amazon leading the pack at 92 percent of total points earned.

A closer examination reveals several key components that distinguish these top performers from their competitors:

1. Mobile Experience: The top retailers excel in providing high-quality mobile experiences. On average, these leaders scored 80 percent in mobile capabilities compared to just 54 percent for others. A fully functional mobile app has become a significant differentiator, as seen in Amazon's success.
2. Flexibility in Offerings: Successful merchants support both digital and physical gift cards, catering to diverse consumer preferences.
3. Clear Delivery Timelines: Clarity in delivery timelines and personalization options are critical. Top brands offer scheduling and easy gifting options, enhancing the overall customer experience.

These findings validate the notion that success in the gift card space is not confined to specific retail categories; rather, it is achievable across various verticals.

Key Findings Retailers Need to Know

Understanding the factors that drive success in digital gift card programs is essential for retailers. The report outlines several best practices that can lead to measurable improvements:

Mobile-First is Mandatory

Consumer expectations for mobile functionality are higher than ever. Retailers must ensure that their mobile purchase and recipient experiences are fully featured and intuitive. The report indicates notable year-over-year improvements in mobile app (+5 percent) and mobile web (+6 percent) scores, highlighting the necessity of a mobile-first approach.

Payment Flexibility Matters

The integration of payment options, including Apple Pay, Google Pay, and buy now, pay later (BNPL), has proven to enhance mobile app scores by up to 28 percent. This flexibility caters to the diverse preferences of consumers, leading to increased satisfaction and sales.

Self-Use is on the Rise

The trend of consumers purchasing gift cards for themselves is gaining traction. Retailers that facilitate self-use witnessed a 30 percent score lift, indicating a need to cater to this growing segment.

Recipient Experience is the New Battleground

Digital gift cards have achieved an impressive score of 89 percent in recipient satisfaction, while physical cards lag significantly at just 51 percent. Prioritizing the recipient experience is critical for retailers aiming to enhance their gift card offerings.

Fraud Protection Must be Invisible

As customer expectations around security rise, retailers face the challenge of balancing fraud prevention with a seamless checkout experience. With nearly half of customers stating they would shop elsewhere after a declined payment, invisible fraud protection strategies are essential.

Vertical Performance and Growth Opportunities

Analyzing performance across different retail verticals reveals both strengths and opportunities for growth:

• Top Performers: Grocery/Convenience (67%), Specialty (63%), and Sporting (62%) sectors demonstrate strong performance in digital gift card sales.
• Growth Opportunities: Sectors such as Travel (50%), Marketplace (52%), and Entertainment (54%) present significant growth opportunities. Enhanced gift card discoverability and personalization options can unlock untapped potential in these verticals.
• Gaming Sector Growth: The gaming category has shown remarkable improvement, jumping 9 points year-over-year due to enhanced B2B features and better recipient experiences.

These insights suggest that tailored strategies targeting specific verticals can maximize the effectiveness of gift card programs.

Best Practices for Elevating Gift Card Programs

In addition to the research findings, the report offers actionable insights for retail leaders looking to enhance their digital gift card initiatives:

Boost Visibility

Gift cards should be prominently featured on retail websites, including homepages, gifting sections, and site search results. Increased visibility encourages consumers to consider gift cards as viable purchase options.

Market Smarter

Despite the potential for increased sales, only 12 percent of merchants ran gift card promotions during peak shopping periods, and a mere 1 percent utilized social media for marketing gift cards. This represents a significant opportunity for retailers to engage customers more effectively.

Sell Year-Round

Positioning gift cards for everyday use—such as for thank-yous, birthdays, or teacher appreciation—can create additional revenue streams throughout the year.

Lean into B2B

Corporate buyers represent an under-leveraged audience in the gift card market. Retailers that offer seamless access to bulk purchasing with minimal friction can tap into this lucrative segment.

Innovate the Format

Brands that innovate their gift card formats, whether through personalized printable cards, charitable tie-ins, or integration with wedding registries, often achieve higher scores for creativity and customer engagement.

A Strategic Lever for Revenue Growth

Digital gift cards are not merely an ancillary product; they represent a strategic asset in the broader landscape of retail digital transformation. As one of the most scalable, brand-enhancing, and margin-friendly revenue levers available, a thoughtfully executed digital gift card program can significantly contribute to a retailer's bottom line.

Retailers looking to optimize for convenience, loyalty, and return on investment should prioritize the digital gift card experience as an integral part of their omnichannel strategy. By embracing innovation and focusing on customer experience, brands can unlock the full potential of digital gifting.

For further insights and comprehensive analysis on the Australian digital gift card market, retailers can access the full 2025 Best Digital Gift Card Programs (Australian Edition) report.

FAQ

What are digital gift cards? Digital gift cards are electronic cards that can be purchased online and sent digitally to recipients. They can be used to buy products or services from specific retailers.

Why are digital gift cards becoming popular? The rise in online shopping, coupled with consumer preferences for convenience and flexibility, has led to increased demand for digital gift cards.

How can retailers improve their gift card programs? Retailers can enhance their gift card offerings by focusing on mobile experiences, payment flexibility, self-use options, recipient satisfaction, and visible fraud protection.

What sectors are excelling in digital gift card sales? Grocery/Convenience, Specialty, and Sporting sectors are currently top performers, while Travel, Marketplace, and Entertainment sectors present significant growth opportunities.

What marketing strategies should retailers use for gift cards? Retailers should increase visibility on their websites, utilize social media marketing, run promotions during peak shopping times, and position gift cards for everyday occasions.