What Are Gift Cards and How Do They Work?

A gift card is essentially a prepaid card from a retailer or business. It comes loaded with a specific value that the recipient can use to make purchases. Unlike a physical product, it gives the recipient the freedom to choose what they want.

Gift cards can be purchased in-store, online, or even delivered digitally. They’re versatile, widely accepted, and easy to redeem—making them a win-win for both gift givers and recipients.

Why Retailers Love Gift Cards

For retailers, gift cards are a strategic revenue driver. Here’s why:

• Instant revenue without an immediate product exchange: When someone buys a $100 gift card, the business receives $100 right away—even though no product has been sold yet.

• Breakage benefits: Sometimes, customers don’t spend the full amount. If someone spends only $95 of a $100 gift card, the business keeps the extra $5.

• Upselling opportunities: Many customers end up spending more than the card value. A $100 card could easily turn into a $120 purchase because the card makes the rest feel like “free money.”

• Customer acquisition: A gift card brings new customers into your store—people who might never have visited otherwise.

This is why both small businesses and global brands have embraced gift card programs.

Why Consumers Love Gift Cards

From the customer’s perspective, gift cards are all about choice, freedom, and convenience.

• Freedom of choice: Instead of receiving yet another mug, snow globe, or T-shirt they don’t need, recipients can choose something they genuinely want.

• Flexibility: Gift cards can be used online or in-store, across a wide range of products and services.

• Popularity: Studies show nearly 60% of people prefer gift cards over traditional presents. In the U.S., over 90% of people have either given or received one.

Think about it: would you rather buy your colleague a random item they may already have, or give them a gift card that lets them pick what they want? The answer is obvious.

4 Reasons Gift Cards Make the Perfect Gift

1. Stress-Free Gifting

Gift cards take the stress out of gift shopping. Instead of guessing your sister’s favorite lipstick shade or your coworker’s shoe size, you can simply get them a gift card from their favorite store. They’ll love it more because they can buy something they truly need.

2. Personal and Thoughtful

Contrary to popular belief, gift cards can be personal. If you know your mom loves Tesco, get her a Tesco gift card. If your colleague is a coffee addict, get them one from their favorite café. It shows that you’ve paid attention to their interests.

In fact, 77% of people say they like gift cards because they allow them to treat themselves to something they really want.

💡 Tip: To choose the right card, just observe. Where do they shop? What do they wear? Do they order from Lazada every week? These small clues make it easy to pick the perfect gift card.

3. Helpful for People on a Budget

Gift cards can also ease financial pressure. For instance, a petrol gift card helps a friend pay for fuel, while a department store card helps someone buy clothes for an event without dipping into their savings. In this way, gift cards are not only thoughtful but also practical.

4. Easy to Buy (and Use) from Anywhere

Thanks to the internet, you can purchase gift cards online without leaving your couch. Many retailers offer digital gift cards that can be emailed directly to the recipient. Redeeming is just as simple: enter the code during checkout, and the balance is applied instantly.

Why Businesses Should Consider Launching Gift Card Programs

Gift cards don’t just make great gifts—they’re also a powerful business tool. By offering a gift card program, you can:

• Secure upfront revenue

• Attract new customers

• Encourage repeat visits

• Increase average spend

• Gather data for personalized marketing

With digital gift card solutions, you can even track redemption, integrate with loyalty programs, and analyze customer behavior. This makes it easy to run smarter campaigns that drive long-term engagement.

Conclusion

Gift cards are no longer a “generic” option—they’re practical, flexible, and deeply appreciated by both givers and receivers. For customers, they’re stress-free and personal. For businesses, they’re profitable and strategic.

So this holiday season, instead of adding another mug or snow globe to someone’s collection, give them a gift card they’ll truly value.

And if you’re a business owner, now is the perfect time to explore how a gift card program can help you grow your brand, increase sales, and delight your customers.

👉 Want to kickstart a gift card program for your business? Talk to us today!