Digital vs. physical gift cards: Which is best for rewards & incentives?

When you're comparing digital gift cards vs physical gift cards for your business rewards program, the choice impacts everything from delivery speed to cost management. Gift cards remain the top choice for rewards — with 53% of U.S. shoppers wanting them for the 18th year running. But which format actually delivers better results for employee incentives, customer rewards, and research compensation?

Quick answer: Digital gift cards are better for most business rewards programs. They deliver instantly, cost less, prevent fraud more effectively, and scale without inventory headaches. Physical gift cards make more sense for premium executive gifts or recipients without reliable internet access.

Read on for more details on how to choose the right type of gift card for your business.

What are the main differences between digital and physical gift cards?

• Delivery speed – Digital gift cards arrive instantly via email or text. Physical gift cards take 3-10 business days for printing, packaging, and shipping.

• Global reach – Digital gift cards work across borders instantly. Physical gift cards need international shipping and customs clearance.

• Cost and liability – Digital gift cards eliminate printing costs, packaging, and postage. Physical gift cards carry upfront production expenses plus inventory risk.

• Redemption flexibility – Digital gift cards offer immediate access to hundreds of brand options. Physical gift cards lock recipients into a single retailer.

How do digital and physical gift cards compare operationally?

Physical gift card programs need serious infrastructure. You're managing inventory, coordinating fulfillment vendors, tracking shipments, and handling address corrections. Every failed delivery means troubleshooting logistics instead of focusing on program impact.

Digital gift cards streamline operations. Whether you’re sending 10 rewards or 10,000, the workflow stays identical. No warehouse space, no minimum order quantities, no unused inventory. Scaling your gift card program happens in real-time, not weeks.

Which gift card type is more secure?

Platforms like Tremendous use encrypted delivery, single-use redemption codes, one-time access links, and AI-powered fraud detection to prevent unauthorized redemptions. You can monitor every gift card transaction in real-time and identify suspicious patterns before funds are compromised.

Meanwhile, physical gift cards become vulnerable the minute they ship. Cards can be stolen during transit, duplicated using card skimming, or intercepted at delivery. Reissuing lost or stolen physical gift cards adds cost and delays.

Are digital gift cards better for the environment?

Physical gift cards generate measurable environmental waste. Standard production uses PVC plastic, petroleum-based inks, cardboard packaging, and fossil fuels for transportation. Even recycled-content cards carry a carbon footprint that digital alternatives avoid.

Digital gift cards = near-zero environmental impact. No plastic, no shipping emissions, no packaging waste. Companies with ESG (environmental, social, and governance) commitments are accelerating the shift from physical to digital. The market also reflects this trend — digital gift cards are forecast to grow at 8% CAGR, hitting $115.3B and capturing 43% of all gift card spend by 2028.

When should businesses use digital gift cards?

Digital gift cards outperform physical options when speed, scale, and flexibility drive program success.

Choose digital gift cards when you're:

• Running employee recognition programs across remote or hybrid teams

• Sending customer referral rewards or loyalty incentives at scale

• Managing research incentive programs where same-day delivery matters

• Distributing sales incentives or performance bonuses to distributed teams

• Operating globally and need to send gift cards across multiple countries

• Tracking program ROI and need detailed analytics on redemption patterns

• Meeting sustainability goals or reducing operational carbon footprint

Companies like Atlassian use Tremendous to send digital gift cards to UX research participants worldwide. Instant delivery keeps research timelines on track, and participants choose from hundreds of brand options — Amazon, Visa, Target, Starbucks, and more — without waiting for physical cards to arrive.

When should businesses use physical gift cards?

Physical gift cards still work for specific use cases where presentation and tangibility create unique value.

Choose physical gift cards when you're:

• Gifting to audiences with limited email access or technology barriers

• Creating premium executive gifts or VIP client appreciation experiences where unboxing matters

• Running in-person events where you're distributing rewards on-site

Some nonprofits prefer physical gift cards for community assistance programs where internet access isn't guaranteed. 

Digital gift cards win for most business programs

For most business gift card programs — employee rewards, customer incentives, research compensation, channel partner programs — digital gift cards deliver better results. They're faster to distribute, easier to scale, more cost-effective to manage, and provide better tracking and fraud prevention.

Physical gift cards serve niche use cases where presentation, limited technology access, or in-person distribution create specific value. But as digital infrastructure improves and recipient expectations shift toward instant gratification, physical gift card programs are becoming the exception rather than the rule.

Ready to streamline your rewards program with digital gift cards?

See how Tremendous helps you send gift cards and prepaid Visa cards to recipients worldwide. Take a demo to learn more.

Comparing prepaid debit cards vs. gift cards

Read the article