Banks Try Digital Gift Cards to Turn Everyday Spend Into Loyalty Perk

Today’s hostile macroclimate is proving to be historically hungry for consumers’ purchasing power.

Record inflation is eating up Americans’ ability to make everyday purchases with little to no worry.

Fortunately, an ongoing foundational shift in the very nature of money and payments is helping cash-strapped consumers find new and innovative ways to make ends meet.

David Metz, founder and CEO of AdTech company Prizeout, tells PYMNTS that digital gift cards with value-add rewards are becoming an increasingly attractive way for financial institutions to weather today’s environmental turmoil while at the same time building on-ramps to lifetime relationships with consumers.

How? While credit unions and banks are constantly searching for new ways to connect with their members and customers, those members and customers are simultaneously looking for ways to save money — and not just survive, but thrive — when it comes to their daily expenses.

This is why digital engagement tools like self-loaded gift cards are proving to be game changers.

“The interesting thing about gift cards is that they run outside of the rails,” Metz explained. “And with non-interest income and interchanges constantly being squeezed, credit unions and banks are looking for ways not to be held hostage by that interchange … this is an avenue to complete the transaction that’s not controlled.”

Read More: AdTech Platform Lets Merchants Tempt Consumers To Turn Payouts Into Rounded-Up Gift Cards

“Branded Currency” as a Competitive Differentiator

As PYMNTS previously noted, the equivalent of $21 billion is waiting to be used on gift cards.

If harnessed correctly, brands can use that “branded currency” to unlock that value, engage and re-engage with customers, secure brand loyalty and uncover new audiences.

And in today’s fast-paced business landscape, where consumer purchasing experiences are becoming increasingly streamlined, optimizing the transaction journey with future-fit efficiencies is imperative.

“What we see is that digital gift cards have replaced what would normally be done with a debit card. Consumers are pre-buying them for the week, getting their bonus money, and then re-upping every week based on their needs, whether it’s $25 on coffee, or $75 on groceries,” Metz said.

He explained that repeat behavior is often observed when using gift cards and noted that merchants see the value in digital gift card redemption as a way to connect with customers, particularly as brands are forced to operate within an increasingly online, cookie-less, digital world.

As a result of these sweeping — and arguably generational — behavioral shifts, it is becoming more crucial for financial services organizations and main street businesses alike to meet this rising and valuable cohort of consumers where they are — online — with personalized services and streamlined offerings.

See Also: Credit Unions Partner With Prizeout to Offer Value-Added Gift Cards

The Sale is Already Done

“Most AdTechs like Facebook and Google are selling impressions and clicks, which they hope will lead to a sale. But those are becoming much harder to track — and businesses are starting to wonder about the ROI (return on investment) they’re getting from their ad spend,” Metz said.

What’s so alluring about digital gift cards, he added, is that the pre-loaded card itself represents a sale already made.

“When the consumer buys a digital gift card, the sale is over — the money is sent to the merchant,” he said. “It’s a 100% risk-free customer acquisition vehicle.”

Metz said that the Prizeout platform, which works with credit unions (CUs) and community banks, helps give their members and account holders added buying power at a critical time — while simultaneously driving more local commerce, ultimately 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.

The post Banks Try Digital Gift Cards to Turn Everyday Spend Into Loyalty Perk first appeared on PYMNTS.com.