Key Takeaways
Gift cards offer faster, safer transactions in industries like gaming by reducing fraud and improving cash flow.
Retailers benefit from upfront payments and breakage, with billions in unused card balances annually.
Consumers use gift cards to control spending, apply budgeting strategies, and simplify international gifting.
For many people, buying a gift card for the first time—such as for a friend’s birthday—can be a major relief. It eliminates the stress of choosing the right gift and worrying about how much to spend without dipping into an emergency fund. While gift cards are often viewed simply as a convenient gifting solution, that perspective overlooks their broader financial utility. These cards offer unique benefits for both consumers and businesses. In this article, we explore how industries are creatively integrating gift cards into everyday transactions, from online gaming to budgeting strategies.
How Online Platforms Capitalised the Benefits
The largest volume of online financial transactions made by consumers is in e-commerce, followed probably by gaming. In recent years, with the growth of digital gaming platforms, many gaming options have become tied to finances. This industry has experimented with several methods of payment, and while we usually talk about crypto, there is more worth analysing.
Online gaming platforms have embraced gift cards as a way for users to deposit funds. Some websites offer gift cards as a method to deposit money. This example shows how gaming companies use prepaid cards to make payments easier. In fact, many gambling websites that take major credit cards also accept prepaid gift cards from those same companies. Why are these platforms leaning into gift cards? The financial logic comes down to a few key advantages:
Faster transactions: Redeeming a prepaid card is typically instantaneous. Players can convert a gift card code into gaming credits within seconds, avoiding the delays of bank transfers or lengthy payment approvals.
Lower fraud risk: Because the funds are prepaid, operators face lower risk of chargebacks or payment disputes. The transaction is one-way — the money is on the card upfront, which protects the platform from the kind of credit fraud or reversed charges that can occur with traditional credit card deposits.
These benefits come without casting gaming in a negative light. Faster, safer transactions and greater accessibility are win-wins for both the platform and the user. By allowing deposits via gift cards, gaming sites tap into a prepaid system that is efficient and user-friendly, all while reducing financial friction. In a competitive online entertainment market, such conveniences can be a differentiator that keeps customers engaged.
Cash Flow and Loyalty Benefits of Gift Cards
When a retailer or platform sells a gift card, it receives cash upfront in exchange for a promise of future goods or services. This improves immediate cash flow and acts like a short-term, interest-free loan from the customer. As an industry analysis put it, “Gift cards are essentially interest-free loans from a consumer” that bolster working capital. The company can use that money right away to invest or operate, even before any product is redeemed.
There’s also a good chance the full value of the card won’t be redeemed. Every year, a portion of gift card balances goes unspent, known in accounting as breakage. CNBC noted that “about 2% to 4% of gift card money goes unused every year”, amounting to $2–4 billion in lost spending value (and saved revenue for companies) in the U.S. alone. In a mid-2023 survey, nearly 47% of U.S. adults had at least one unused gift card or store credit, with an average value of $187 per person – roughly $23 billion sitting in drawers and digital accounts.
For retailers, that represents billions in funds collected but never reclaimed in merchandise. Unsurprisingly, companies count on some breakage as pure profit.
Flexibility in managing finances
Gift cards are great because they give people flexibility, whether you’re sending a gift overseas or managing your own budget. Sending a physical gift to someone in another country can be expensive and slow. For example, mailing a small package from the U.S. might cost $30 just in postage and take more than a week to arrive. There could also be extra fees or the risk of the gift getting lost or damaged.
A digital gift card avoids all of that. Many big stores offer e-gift cards you can send by email, so the person gets it right away, with no shipping costs. It’s also smart financially; the sender pays only the gift amount, and the receiver can choose what they want, often in their own currency. For instance, a $50 physical gift might end up costing $80 after shipping, but a $50 e-gift card costs exactly $50. It’s a win for both sides: the giver saves money, and the receiver gets full value instantly.
Gift cards also help individuals control and budget their spending. Prepaid cards have a fixed stored value, which can act as a self-imposed spending limit. Even if we talk about gaming platforms, they may easily show the other side of gift cards which is the flexibility in managing finances. Let’s explain this. For games like poker, the bankroll management is a crucial aspect. Now, when you have money on the gift card and want to play with it, the bankroll management becomes even more efficient as you won’t be prone to spending more than you could afford as the money is fixed. In other words, using a gift card can enforce discipline: once the preloaded funds are used up, you simply can’t spend more unless you deliberately reload.
This concept applies to everyday budgeting as well. Some consumers allocate specific expenses to prepaid cards; for example, loading a set amount each month onto a gift card or prepaid card for dining out or gaming. This creates a hard cap on that category of spending, preventing impulse purchases beyond the budgeted sum. By siloing funds in a gift card, you ensure that a fun night of online poker or a holiday shopping spree doesn’t accidentally dip into rent or savings money. It’s a modern twist on the old envelope budgeting system, giving users flexible yet controlled spending power.
