US Gift Card and Incentive Card Market Size & Share Analysis - Growth Trends & Forecasts

US Gift Card And Incentive Card Market Trends and Insights

Rapid shift to digital & mobile-wallet gift cards

Mobile wallets have become the default redemption method as Apple Pay and Google Pay acceptance removes the friction of plastic cards at checkout. The Consumer Financial Protection Bureau’s 2024 large-participant rule formalized oversight of payment apps that process at least 50 million transactions, underscoring the systemic role of digital gift cards^{[1]Consumer Financial Protection Bureau, “CFPB Finalizes Rule to Ensure Big Tech Firms Comply With Consumer Financial Protections,” consumerfinance.gov}. Retailers gain higher engagement by embedding brand-specific cards in their own apps, while corporate buyers appreciate the instant fulfillment and audit trails that digital delivery provides. This interplay drives a 12.34% CAGR for digital formats and encourages issuers to prioritize real-time balance updates, partial redemption tools, and loyalty integration features. 

Corporate demand for incentive cards in HR & loyalty programs

Enterprises treat cards as flexible, tax-efficient benefits that avoid payroll complexities. Spot bonuses and milestone rewards grow in relevance for remote staff, and loyalty managers increasingly swap physical merchandise for digital gift card redemption. Target’s loyalty revamp, which quadrupled membership and delivered 350 million incremental guest trips compared with 2019, illustrates how card integration lifts visit frequency. High-volume corporate contracts provide forecastable revenue and dampen seasonality for issuers. 

Gen-Z “self-use” gift-card budgeting trend

Younger consumers allocate digital cards as category-specific spending envelopes for dining, entertainment, and wellness. PwC’s 2024 holiday survey found 65% of shoppers still planned to buy gift cards, yet Gen Z tilted toward experiences over tangible goods. Retailers respond by marketing cards for budgeting rather than gifting, flattening seasonal peaks, and improving cash-flow predictability. 

State escheatment-law changes spurring bulk B2B issuance

Idaho’s 2024 repeal of a de minimis exemption and Maryland’s 2025 packaging mandates illustrate tightening state oversight. Corporations bulk-load cards, then engage recipients before dormancy periods expire to minimize unclaimed balances. Sophisticated tracking software alerts HR teams ahead of escheatment deadlines, benefiting vendors that provide integrated compliance dashboards. 

Escalating gift-card fraud & scam losses

Organized fraud rings siphon USD 5.7 billion each year through card-draining tactics that exploit open-loop anonymity^{[2]Jenna McLaughlin, “Gift Card Theft Is Soaring,” propublica.org}. Maryland’s Gift Card Scams Prevention Act now requires tamper-evident packaging and staff training from June 2025, and other states are drafting similar rules. Compliance raises costs for retailers, yet stronger security standards also improve consumer confidence, especially for digital formats that avoid on-shelf exposure. 

CARD Act & multi-state compliance costs

Federal limits on fees and expirations combine with a patchwork of state laws covering disclosures, packaging, and employee education. Iowa, Nebraska, and West Virginia introduced statutes mandating fraud warnings on racks, adding training expense for mid-market chains. Issuers must juggle divergent record-keeping protocols, prompting many to outsource compliance management. 

Segment Analysis

By Card Type: Open-Loop Growth Challenges Closed-Loop Dominance

Closed-loop programs maintained a 62.3% share of the US gift card and incentive card market in 2024 because branded issuers control pricing and harvest customer data. They rely on app-based balances that create direct engagement, and unit economics improve without network fees. Open-loop competitors nevertheless outpace overall growth at an 8.94% CAGR, propelled by corporate incentive demand for universal acceptance. Maryland’s 2025 security rules that single out network-branded plastics raise execution hurdles, yet Visa’s USD 15.7 trillion transaction backbone assures scalability^{[3]Visa Inc., “Fiscal 2024 Annual Report,” visa.com}. 

Corporate bulk purchasers increasingly mix both formats, sending open-loop cards for cash-like flexibility and closed-loop cards when encouraging spend with preferred suppliers. Issuers calibrate fraud investments, as open-loop designs shoulder higher attack risk. Meanwhile, closed-loop leaders such as Starbucks deepen loyalty integration to lift reload frequency. The coexistence of formats ensures the US gift card and incentive card market remains segmented by use case rather than a winner-take-all scenario.

By Format Type: Digital Transformation Accelerates

Digital cards accounted for 57.4% share of the US gift card and incentive card market in 2024 and will expand at 12.34% CAGR, well above the overall US gift card and incentive card market. Low production costs, instant delivery, and mobile wallet compatibility drive adoption. Consumers appreciate partial redemptions that track residual value, and corporate administrators prefer downloadable CSV reports that simplify tax filings. 

Physical cards continue serving gifting rituals in grocery aisles where tactile presentation still matters. Hybrid use cases abound, for example, QR-coded holiday cards that convert into app-based balances. Fraud mitigation benefits digital products since activation occurs server side rather than on store racks vulnerable to barcode skimming. Regulators now monitor large digital payment facilitators, which reduces perceived risk and stabilizes growth. 

By Consumer Type: Corporate Dominance Reshapes Market Dynamics

Corporate buyers controlled 65.6% of the US gift card and incentive card market share in 2024 and are projected to advance at 9.13% CAGR to 2030. HR departments treat cards as morale boosters that bypass payroll taxes, and loyalty teams prize universal redemption that broadens appeal. Centralized procurement APIs link directly to expense-management suites, facilitating same-day distribution for remote staff. 

B2C gifting still flourishes around holidays, yet new self-use budgeting behavior among Gen Z targets discretionary spending with brand-specific reloads. Issuers, therefore, personalize marketing by recipient type, offering corporate dashboards for bulk purchasers and gamified saving tools for individual users. 

By Distribution Channel: Online Platforms Dominate Growth

Online outlets captured 62.2% share of the US gift card and incentive card market size in 2024 and will climb at 11.24% CAGR. E-commerce embeds card options at checkout, subscription upsells, and loyalty redemptions. These digital placements require near-zero incremental shelf space and enable A/B testing of promotional copy in real time. 

Brick-and-mortar remains relevant for impulse purchases, especially in supermarkets where third-party racks host multi-brand cards. Retailers experiment with interactive kiosk displays that print on-demand codes, marrying physical presence with digital fulfillment. Omni-channel redemption supports buy-online-pickup-in-store journeys, tightening the loop between physical and virtual commerce. 

By Industry of Application: Food Service Leadership Faces Wellness Challenge

Food and beverage applications held a 26.7% share of the US gift card and incentive card market size in 2024, with Starbucks alone loading USD 3.6 billion in Q1 2024, reinforcing its stature within the US gift card and incentive card industry. Frequent purchase cycles and loyalty tie-ins make restaurant cards sticky. 

The health, wellness, and beauty segment is expected to register the fastest 9.78% CAGR as consumers prioritize self-care experiences. Spas, fitness studios, and skincare brands leverage white-label SaaS systems to deploy reloadable cards connected to booking apps. Retailers in electronics, apparel, and home improvement continue steady issuance, but experiential categories steal share as Gen Z budgets toward lifestyle services. 

Geography Analysis

Metropolitan regions lead digital uptake because smartphone payments and contactless POS are ubiquitous. Cities such as New York, San Francisco, and Chicago record elevated mobile-wallet redemption, while rural and suburban zones display lingering preference for physical racks. Coastal states exhibit the highest wellness-sector penetration, tied to income levels and consumer health priorities. Midwestern and Southern shoppers still favor food service and general merchandise cards sold in grocery channels. 

Corporate headquarters clusters drive B2B volume spikes. Silicon Valley and Seattle technology corridors offer large bundles of open-loop incentives for software engineers, whereas banking hubs like New York favor multi-brand digital catalogs aligned to compliance requirements. State legislation also shapes geography-specific cost structures. Maryland’s packaging mandate and Idaho’s escheatment revisions create early adoption curves for secure designs, with neighboring states monitoring outcomes before implementing copycat laws. 

Cross-state workforces require issuers to enable redemption across all 50 states and to handle tax nexus complexities. National retailers, including Walmart and Amazon, leverage their distribution footprints to maintain even gift card availability, offsetting regional economic variability. Regional employment trends influence seasonal velocity; energy-heavy Southern markets swing with oil prices, whereas diversified coastal economies display steadier throughput.