Gift Card Distributors 101: Pricing, Transparency, And How To Choose The Right Provider For Your Business

But the services they use to distribute those gift cards? Not always so simple and straightforward. 

Historically, incentive reward providers have priced their services in a complicated and confusing manner, to say the least. But it doesn’t have to be that way—nor should it.  

Instead, here’s what to look for if you want a modern and transparent partner for your rewards, incentives, and payout programs.

When to use a gift card distribution company

Companies and research institutions typically use gift cards for one of two reasons:

As a tool to achieve business goals—to fill their pipelines by increasing leads and referrals, lowering customer acquisition costs, motivating sales teams, and similar methods, to improve quality and quantity of survey responses for both academic and market research, or to improve company culture and lower attrition by fueling successful employee rewards programs

Increasingly, companies are also using digital prepaid cards (ie, Visa and MastercardⓇ) as payouts for a broader range of financial transactions, such as settlements, research participation, and other types of business to consumer (B2C) disbursements.

Some larger companies also look to gift card distribution companies to monetize their incentive delivery solutions and/or add a reward distribution channel to their existing platforms.  

Of course, there are other types of incentives a company might use—things like employee vacations, extra PTO, or classic (and increasingly dated) ‘merch’ like watches and branded socks. 

But the research is clear that digital gift cards and prepaid cards make great incentives because they can be delivered instantly in small and variable denominations. They’re operationally sound and incredibly cost-effective. 

And since gift cards can be used for merchandise, travel, and more, they actually encompass all other forms of incentives at once. 

Moreover, research shows that two out of three people who receive a gift card as an incentive will remember why and how they earned it and what they redeemed it for. Better still, they associate that reward positively with the company that gave it to them.  

"Digital gift cards get results." 
-Giftbit CCO Nat Salvione

Imagine if you had a $50 gas card you could use the next time you fill up your tank. 

“You’d be very thankful for the company that gave you that reward,” says Nat. 

Even once they’ve settled on using gift and prepaid cards for their program, companies still have some options for how to manage them. Instead of using a distributor, a small business in particular might start by buying a stack of Amazon cards and mailing them out, for example. 

But what seems like a simple solution is often more trouble than it’s worth, and a lot more time-consuming than expected. Your program manager will need to buy and mail cards, track who actually receives and redeems them, and who needs to get them next (and when). This usually ends up taking many more hours out of a work week than you might think, even for small programs (hint: 10 hours a week is fairly standard). 

“Giftbit has literally saved 25% of my time, which is great because I’m the only Project Manager on our team.”
—Greg Augustine, Project Manager — Prime46
See how Greg saves 10 hours a week on incentive fulfillment

That’s why working with an integrated gift card distribution partner is the best option for companies that want to send regular incentives without any extra internal burden. 

You’ll also need a distribution partner if you need international options, want to automate the delivery process, and/or intend to provide support for your recipients should they have questions (hint: good recipient support is really a make-or-break feature in this space). 

Gift card distribution channels

Once they’ve decided to send gift cards with an incentive provider, there are several ways a company might choose to actually distribute them.

For example, Gifbit customers can choose to send their cards via email, text, and social or direct SMS. 

Some of our customers use creative methods for distributing rewards at in-person events, maybe by using a QR code (an especially popular option for trade show booth engagement) or a similar option. 

Or they build an integration (either through Zapier, or using the Giftbit API), so that they can offer rewards, incentives, and payouts directly through their own app or employee portals. 

How to choose a gift card distribution partner: red flags to avoid

There are lots of things to consider when choosing a B2B gift card distributor, not the least of which is financial fit. 

Rewards and incentives are supposed to do something—and essentially either increase revenue or support similar business/financial goals. But that won’t happen as easily when companies have to pay more for gift cards or their program than they’re worth.  

Almost by definition, there will be costs (often but not always financial) associated with incentives. A $25 gift card is going to cost someone at least $25. 

But there are still distribution companies that charge fees to use their services. If you use them to send a $25 gift card, for example, you might have to actually pay $30 for the ‘privilege’ of doing so. 

❌ That should be a huge red flag for anyone considering that platform—especially since, as we’ll cover below, there are other more substantial ways that gift card companies can make money. These fees are really just a way of double-dipping from their customers.  

Instead, look for gift card distribution companies that don’t charge any fees to use their services. 

“We believe that when a company pays money for an incentive, all of that cost should go to the incentive itself,” says Nat. “The most effective incentives programs are ones where the entire budget goes to the reward.” 

That means the person getting that reward (i.e. the recipient) gets the full $25 gift card or prepaid card, without the company having to pay extra for it. 

Never accept fees, exclusives, or minimums from a gift card partner

When you start researching rewards and incentives providers, you’ll start to see that exclusives and minimums are still widespread in the industry. 

❌ Exclusives and minimums are another big red flag. 

“Exclusivity is a business tactic that really should have gone away in the ‘80s and ‘90s,” says Nat. “It’s too old-fashioned.”

Yes, this approach is old-fashioned. It’s also indicative of a lack of innovation. With an exclusivity contract, the company has locked you in, whether they’re innovating or not. 

Naturally, this is good for the provider’s bottom line. But, also naturally, it’s not so good for their clients, who are prohibited from finding or using better deals elsewhere. 

Sometimes, it’s not really the act of using incentives themselves that isn’t working for a company, but their incentive provider. But if they’re trapped into an exclusivity situation with a provider who isn’t meeting their needs, they won’t really be able to improve their incentive programs. 

“Our belief is the exact opposite: order as much or as little as you want from us, and we’ll demonstrate value to you by doing a good job,” says Nat. “We believe that digital rewards and incentives simply work the best for most businesses, and that if your program is transparent and we make it easy to send, you’ll keep using us.” 

In other words, you’ll want to find a provider who ties their success to your success.

“Exclusivity kills innovation,” says Nat. 

⭐ Look for transparent pricing from your gift card partner

Now you know what you don’t want when picking a gift card platform: minimums, restrictive contracts, paying more than face value for your rewards and incentives. 

✅ But what do you want? In a word: transparency. 

In fact, you’ll quickly find that the biggest red flag when choosing a reward provider will be opaque, complicated pricing and a lot of secrecy around how the provider is making money. 

So … how do gift card aggregators make money?

Primarily, we all make money the same way: by negotiating with the brands in our catalog to get a discount off the face value of the cards we’re offering. 

Say you want to send a potential customer a $25 Starbucks gift card from Giftbit. That will only ever cost you $25. And your soon to be new customer will get exactly $25. 

But because of our long-standing relationship with Starbucks, that card actually costs us less than $25. And we keep the difference. 

In industry parlance, this difference is called the ‘spread.’ And gift card distributors make money from beneficial spreads. 

Like you might imagine, every brand that sells B2B gift cards is going to offer different sized discounts to different distributors. That’s why established companies like Giftbit have Partnership departments that negotiate with brands to keep those spreads beneficial for everyone. 

In a nutshell, we all make money from our spreads. 

It’s incredibly rare for a gift card provider to offer complete transparency in their costs, pricing, and overall business model. In contrast, Giftbit is unique in our commitment to providing as much transparency as possible to our customers, even when brand discounts change in our favor. 

Moreover, like we’ll cover next, Giftbit also offers revenue sharing, so that our clients can benefit from these spreads, too.  

Giftbit’s unique gift card distribution pricing model

Again, it is incredibly rare (and almost non-existent) for a gift card distributor to share the actual discount rates they’re getting from their providers. 

But at Giftbit, we encourage customers to have a conversation with us about their goals and budgets, so we can tailor a mutually beneficial revenue sharing plan. 

“We believe we shouldn’t hide what we’re getting, so that our customers know what they’re getting, too,” says Nat. 

There are other business gift card distribution companies that are transparent in theory.. 

But, like we mentioned, discount rates change frequently. And when they change in favor of the distributor, they often don’t disclose that information to their customers, even ones they’re technically sharing revenue with. 

✅ Meanwhile, Giftbit is transparent in our pricing structure and in our reporting. 

We make it easy to monitor the results of your gift card programs themselves (how are they performing? how can they be improved?). This includes reporting on who’s redeeming their rewards or even opening their emails to see them (a particularly useful feature for digital payouts). 

And we also provide full and clear reporting of all the financial aspects of your program. 

Of course, thanks to how many different discount rates and changes there can be within a rewards catalog, gift card distribution pricing may never be truly ‘simple.’

“Still, we’re endeavoring to make a pretty complicated niche industry clear and understandable for our customers,” says Nat. 

More revenue for gift card distributors (and, in some cases, their clients)

Discounts are incredibly important for gift card distributors, but another important revenue stream can come from promotional offers. 

You probably know that the gift cards you buy for yourself usually don’t expire.

But gift cards that companies use for promotional activities often do expire. For example, a company may want to offer a substantial rebate, maybe for a holiday promotion. This type of rebate usually has a short claim period, called the ‘offer period.’

The length of this offer period can vary, but 60-90 days is pretty standard. Businesses use short offer periods to create a sense of urgency and to help manage costs. 

When a company needs to run these types of limited-time promotions, it’s generally the case that some of those offers won’t be redeemed, for a variety of reasons. 

That means that at the end of an offer period, they can usually expect some unclaimed promotions. In other words, there’s money on the table. 

Where that money actually goes will vary from distributor to distributor, and will impact the overall cost-effectiveness of your program. Ask most providers what happens to any unused money from your expiring rewards, and you’ll probably get a very vague answer. 

✅ From Day One, Gifbit’s business model has been to be transparent about expiring offers, and to share a portion of the breakage generate by the program with our customers. 

"One important decision Giftbit made early on was to be transparent about promotional offers. We made it clear that promotional offers have unused value and we enabled customers to get unused value back. This decision felt straightforward and obvious at the time and has now become more standard across the industry." 
-Giftbit CEO Leif Baradoy

Naturally, not all rewards should expire, and payouts typically never expire. 

But when a limited-time promotional offer is the best option for our customers, Giftbit is still the best and most cost-effective partner for executing them. 

We offer all this mutually beneficial pricing to our customers for one main reason: we want to remove all fears about costs and pricing, so that they can focus on making the best possible programs for their goals. 

“We focus on executing the delivery of rewards in the easiest, most cost-effective ways possible, so that our customers can focus on executing their programs and ensuring they’re meeting all their business goals,” says Nat. 

What else do you want in a gift platform?

Financial fit is important when selecting a gift card distributor, but it’s not the only thing companies should prioritize. 

Specifically, if you’ve been tasked with making this decision for your company, there are three other differentiating factors to consider. 

First, how comprehensive is their rewards catalog?

Incentive programs work best when the catalog is filled with hundreds of options for your recipients. 

This means digital gift cards to things like restaurants and online stores, popular brands and more niche companies, all-in-one shops like Amazon and Target, and a whole lot more.

It means charity options, along with Visa and Mastercard prepaid cards that give your recipients even more flexibility (bonus points for global Mastercard prepaid cards in USD that can be used worldwide). 

It means having more global options for recipients in other countries. 

And it means having the ability to customize which reward options you send to which recipients (offering full catalog choice is often the preferred option, but there are many reasons why you might want to limit your selection, too). 

Pro-tip: gift cards for budget busting items like gas and groceries are always popular. 

Second, how easy is the platform to use? 

When picking a gift card distributor, you basically want to ‘set it and forget it.’ 

Ideally, you want to find a partner, get your incentive or payout program up and running, and then ultimately forget about the platform you’re using. 

This lets you focus on the business outcomes you’re trying to achieve, instead of wrangling with your platform and delivery all day. 

For example, Giftbit client Eirik Hernes Berre, COO & Co-Founder of Curipod, was able to set up a scalable incentive program by himself in just ten minutes. It’s now the company’s most effective growth channel, yet still quite hands-off. 

Pro-tip: Always look for a partner with great onboarding and support, even when you have a straightforward use case like Eirik’s. 

There’s a reason Giftbit Head of Customer Success Sofia Baltasar and her team regularly enjoy average satisfaction rates of 95% or higher.  

Third, will they integrate with your existing workflows?

Think about the person who will actually be running your rewards and incentives programs. Will they be able to do so from the tools they’re already using, like Google Docs, SurveyMonkey, or Hubspot? 

Ultimately, your goal when adding any new software to your organization should be to integrate and automate as much as possible. 

Pro-tip: It’s always free to sign up for a Gifbit account to see what sending digital gift cards would look like ‘in real life.’ See how the platform works by making some sample reward templates that you’ll be able to send if/when you’re ready! 

A better option for gift card distribution

If you’re considering a gift card program, whether that’s to engage employees, get more leads and business growth, or something else, remember that rewards and incentives get results. 

✅ And rewards and incentives will get much better results when they work great operationally, are delivered instantly, and include a full catalog of highly desirable choices. 

Giftbit offers all of the above, along with no fees (and in some cases, significant cost savings, too). 

Schedule a call or demo with our Sales Team now to see if Giftbit is the right gift card distributor for your needs.