Digital gift cards with value-added rewards are increasingly appealing to financial institutions as a means of navigating the current turbulent landscape and fostering long-term relationships with consumers.
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GLOToday’s challenging economic environment is significantly impacting consumers’ purchasing power, as inflation reaches record levels and hampers their ability to make everyday purchases without concern. However, there is a silver lining in the form of a transformative shift in the nature of money and payments, which is helping financially constrained consumers discover innovative ways to make ends meet. David Metz, the founder and CEO of AdTech company Prizeout, explains that digital gift cards with value-added rewards are increasingly appealing to financial institutions as a means of navigating the current turbulent landscape and fostering long-term relationships with consumers.
How does this work? While credit unions and banks continuously seek fresh avenues to engage with their members and customers, these individuals are simultaneously searching for ways to save money and thrive amidst their daily expenses. This is where digital engagement tools like self-loaded gift cards prove to be game changers.
Metz explains that gift cards offer a unique advantage as they operate outside of traditional financial systems. As non-interest income and interchanges face constant pressure, credit unions and banks are eager to avoid being held captive by these restrictions. Digital gift cards provide an alternative means of completing transactions that are not subject to such constraints.
“Branded currency” emerges as a competitive differentiator in this context. As previously highlighted, there is approximately $21 billion in untapped value stored in gift cards. Brands have the opportunity to unlock this value by utilizing their own branded currency, engaging and retaining customers, fostering brand loyalty, and discovering new target audiences. In today’s fast-paced business landscape, where streamlined consumer purchasing experiences are increasingly important, optimizing the transaction process with future-oriented efficiencies becomes essential.
Metz notes that digital gift cards have replaced the role typically fulfilled by debit cards. Consumers pre-purchase gift cards for the week, receiving bonus money, and continue replenishing their card based on their specific needs, whether it’s $25 for coffee or $75 for groceries. Repeat behavior is often observed with gift card usage, and merchants recognize the value of digital gift card redemption as a means to connect with customers, particularly in an online, cookie-less, digital world.
As a result of these significant and potentially generational shifts in consumer behavior, it is crucial for financial services organizations and local businesses to meet these valuable customers where they are: online. Providing personalized services and streamlined offerings becomes increasingly important.
What sets digital gift cards apart is that they represent a sale that has already been made. Unlike most AdTech companies that sell impressions and clicks with the hope of converting them into sales, digital gift cards complete the transaction when purchased, with the money immediately transferred to the merchant. This makes digital gift cards a risk-free customer acquisition tool, offering 100% certainty.
Metz emphasizes that the Prizeout platform, which collaborates with credit unions and community banks, empowers their members and account holders with increased purchasing power during critical times, simultaneously driving local commerce and benefiting local businesses, consumers, and financial institutions.
Community banks and credit unions generally have large, geographically distinct user bases and similarly large bases of small businesses. Offering digital cards that can be used at those businesses to the community bank and credit union account holders and members is a way to knit together local areas by keeping the community spend all in one place.
This, as nearly half of credit union executives have said that a lack of resources prevents them from bringing innovations to market, according to “Credit Union Innovation: Product Development Slowdown Tests Member Loyalty,” a PYMNTS and PSCU collaboration.
In today’s environment, where companies face increased competition across platforms for consumers’ share of wallet, merchants and financial providers shouldn’t write off digital gift cards as an innovative way to unlock value, engage and re-engage with customers, grow loyalty and find new audiences.
