Digital Gift Cards Are a Strategic Growth Channel for Retailers

Digital gift cards are no longer merely a convenient substitute for physical presents. They're increasingly becoming a customer acquisition, retention and engagement tool that retailers can leverage throughout the year.

The ninth annual benchmark report on the best direct digital gift card programs across North America, produced by NAPCO Research in partnership with Blackhawk Network (BHN), highlights the growing importance of gift cards within a retail environment shaped by mobile commerce, artificial intelligence and heightened consumer expectations. The research points to a global gift card market projected to reach $1.7 trillion by 2030, underscoring the scale of the opportunity for merchants that treat their programs as strategic assets and not as afterthoughts to core products.

Digital Gift Cards Meet Consumers’ Demand for Flexibility

Gift cards have traditionally been popular amongst consumers because they remove much of the uncertainty from gift-giving. That value proposition appears especially relevant to younger shoppers: The report notes that 71 percent of Gen Z and millennial shoppers purchased gift cards instead of physical gifts this past holiday season.

For retailers, that behavior creates benefits on both sides of the transaction. The purchaser gains speed, convenience and confidence, while the recipient receives the flexibility to choose the product, service or experience that best fits their needs.

A strong digital gift card program also introduces a recipient to the retailer — sometimes for the first time. That makes every gift card a potential customer acquisition vehicle rather than simply a stored-value transaction.

Therefore, retailers should design the recipient experience with the same care as the purchase journey. Clear redemption instructions, mobile-friendly balance updates, seamless checkout integration, and relevant product recommendations can help turn a one-time recipient into a repeat customer.

Mobile and AI Are Reshaping Gift Card Programs

The report examines how gift card performance correlates to two broader shifts in digital commerce: the continued importance of mobile shopping and the emergence of AI-powered product discovery.

The strongest digital gift card programs treat mobile (including apps) as the primary shopping experience. Retailers that invest in seamless mobile purchasing, digital wallet integration, SMS delivery, personalization, and frictionless redemption are better positioned to increase conversions, improve customer satisfaction and drive repeat purchases.

At the same time, AI is becoming more influential across merchants' gift card programs. In fact, AI affected approximately $272 billion in global retail sales during the 2025 holiday season, and AI-powered shopping is forecast as a $115 billion opportunity.

For gift card programs, this means discoverability must extend beyond traditional website navigation and search engines. Consumers are beginning to ask conversational platforms where they can purchase a particular retailer’s gift card, what delivery options are available, and which brands (and their products) fit a specific recipient or occasion.

Retailers should ensure that gift card pages contain accurate, structured and easy-to-understand information about denominations, delivery methods, personalization, expiration policies and redemption. Programs that are difficult for consumers — or AI tools — to find and/or understand risk being excluded from the consideration process.

Discovery Must Be Easy

One of the clearest best practices is also (seemingly) the simplest: Make gift cards easy to find on your brand's digital properties. A shopper shouldn't have to search multiple navigation menus or leave a retailer’s primary website to determine whether digital cards are available. Prominent homepage links, strong site-search results, and optimized landing pages can reduce friction at the beginning of the journey.

Similarly, the purchase process should offer flexibility without becoming overwhelming. Retailers can add value through multiple denominations, scheduled delivery, occasion-specific designs, payment options, and personalized messages. For example, features such as photo uploads or digital greetings can also make a e-gift card feel more thoughtful and less transactional.

Post-purchase communication is equally important. Both purchasers and recipients should receive clear confirmation messages, delivery updates and accessible customer service options. Retailers should test the entire purchase journey regularly across desktop, mobile web and apps, not just the checkout page.

Move Beyond a Holiday-Only Mindset

Merchants should embrace the mindset of promoting gift cards throughout the year (not just during the traditional Q4 holiday season), including using them to win back lapsed customers. Birthdays, graduations, weddings, employee recognition and customer service recovery all represent opportunities to market gift cards. Retailers can also use promotional incentives (e.g., offering a bonus card with a qualifying purchase, buy a $100 gift card and get $10 free) to drive incremental spending or reactivate customers.

Ultimately, the most effective programs treat gift cards as an integrated retail channel supported by merchandising, marketing, technology and customer experience teams. As the market grows and shopping becomes more mobile and AI-assisted, the retailers that make gift cards visible, flexible and frictionless will be best positioned to turn a simple gift into a lasting customer relationship.

To learn more about the digital gift card market, including the top retail performers in this year's rankings, download the 2026 Best Direct Digital Gift Card Programs report.