Global Gift Card Market 2025-2029: AI & E-commerce Growth Trends

The global gift card market is projected to grow by $1.33 billion between 2025 and 2029, with a compound annual growth rate (CAGR) exceeding 15.4%, according to the latest market report by Technavio. This impressive growth is primarily fueled by the increasing adoption of e-commerce, the rise of open-loop gift cards, and the integration of artificial intelligence (AI) in digital payment solutions.

Gift cards have evolved from being simple prepaid instruments to sophisticated financial tools integrated with digital wallets and AI-powered recommendation systems. As more businesses and consumers embrace digital transactions, the demand for personalized, flexible, and secure gift card solutions continues to rise. However, despite the strong growth trajectory, challenges such as high service fees, expiration policies, and the risk of unused funds remain key concerns for consumers and businesses alike.

This article explores the major trends, challenges, and opportunities shaping the global gift card market over the next five years.

Key Market Drivers

1. E-Commerce Boom and Digital Payment Adoption

With the rapid expansion of online shopping and the growing popularity of digital wallets, gift cards have become an integral part of the digital payment ecosystem. Platforms like Amazon, eBay, Apple Pay, and Google Pay have significantly contributed to the growth of digital gift cards, allowing seamless integration with online transactions.

Retailers are increasingly offering customized e-gift cards, allowing consumers to make instant purchases across multiple platforms. The ability to send gift cards via email, SMS, or mobile apps has made them a convenient gifting option in today’s fast-paced digital world.

2. The Rise of Open-Loop Gift Cards

Unlike traditional closed-loop gift cards that are restricted to a specific brand or store, open-loop gift cards issued by Visa, Mastercard, and American Express offer greater flexibility. These cards can be used at multiple merchants, making them more appealing to consumers and businesses.

Additionally, corporations are using open-loop gift cards for employee rewards programs, travel incentives, and business expense management, further driving market demand.

3. AI-Driven Personalization and Fraud Prevention

Artificial intelligence is transforming the gift card industry by improving personalization, security, and fraud detection. AI-driven solutions allow retailers to:

Analyze consumer behavior to provide personalized gift card recommendations
Detect fraudulent transactions and prevent scams
Automate gift card distribution for corporate and promotional campaigns

For instance, AI-powered analytics can predict a customer’s preferred brands based on past purchases, making gift cards a more targeted and effective marketing tool.

4. Corporate Incentives and Employee Benefits

Gift cards are increasingly being used in corporate incentive programs, with companies offering them as bonuses, employee rewards, and customer loyalty incentives. Businesses prefer gift cards over traditional cash rewards because they encourage brand engagement and customer retention.

According to a report by the Incentive Research Foundation, over 60% of companies worldwide use gift cards in their rewards programs, and this percentage is expected to rise as businesses seek flexible and scalable incentive solutions.

5. The Shift Toward Cashless Transactions

As more countries promote cashless economies, digital gift cards are becoming a mainstream alternative to physical cash and traditional credit cards. Governments and financial institutions are supporting contactless payments and mobile wallet integration, making digital gift cards more accessible and widely used.

For example, countries like China, India, and the UK have seen a surge in mobile-based gift card transactions, further driving market growth.

Challenges and Limitations

Despite the market’s strong growth potential, the industry faces several challenges:

1. Expiration Dates and Hidden Fees

Many consumers are unaware of expiration policies, activation fees, or maintenance charges associated with some gift cards. These hidden costs can lead to customer dissatisfaction and regulatory scrutiny in certain regions.

2. Risk of Lost or Unused Gift Cards

Physical gift cards are prone to loss, theft, or damage, resulting in potential financial loss. Even digital gift cards can go unused if recipients forget about them, leading to billions of dollars in unredeemed gift card balances annually.

3. Limited Denominations and Restrictions

Some gift cards come with fixed denominations, which may not always align with the recipient’s purchasing needs. Additionally, restrictions on partial usage, refund policies, and international acceptance can limit their practicality.

To address these issues, companies are increasingly focusing on:

Flexible gift card denominations
Auto-reminders for unused balances
More transparent fee structures

Market Segmentation: Key Growth Sectors

The gift card market can be segmented based on:

1. By Type

E-Gift Cards – Digital gift cards delivered via email, mobile apps, or online platforms
Physical Gift Cards – Traditional plastic or paper-based cards used at retail stores

2. By Distribution Channel

Online – E-commerce platforms, mobile wallets, digital marketplaces
Offline – Retail stores, supermarkets, banks, and corporate distribution

3. By Geography

North America – The largest market, accounting for 40% of global gift card sales
Europe – Increasing adoption in corporate incentive programs
Asia-Pacific (APAC) – Rapid growth due to mobile payment expansion in China, India, and Japan
Middle East & Africa – Emerging digital payment infrastructure
South America – Growth driven by increasing smartphone penetration

Regional Market Insights

North America: The Leading Gift Card Market

The United States and Canada dominate the global gift card industry, with a well-established digital payment ecosystem and widespread corporate adoption. The demand for holiday and seasonal gift cards, especially during Black Friday and Christmas, continues to drive sales.

Europe: Corporate Incentive Growth

Countries like the UK, Germany, and France are witnessing a surge in corporate rewards programs that incorporate gift cards as employee incentives.

Asia-Pacific: Digital Payments Revolution

The APAC region is experiencing the fastest growth, with countries like China and India leading the shift toward mobile-based gift card transactions. The integration of gift cards into WeChat Pay, Alipay, and Paytm has significantly boosted demand.

Future Trends and Industry Outlook (2025-2029)

As the market evolves, several key trends will shape the future of gift cards:

AI-Powered Smart Gift Cards – AI-driven personalization will make gift cards more tailored to consumer preferences.
Blockchain-Based Secure Gift Cards – Decentralized ledger technology will enhance security and prevent fraud.
Subscription-Based Gift Cards – Brands may introduce gift cards linked to monthly memberships or loyalty programs.
Cryptocurrency Gift Cards – Some platforms are exploring gift cards that allow purchases in Bitcoin, Ethereum, and other digital assets.
Omnichannel Integration – Gift cards will seamlessly integrate across physical stores, mobile apps, and e-commerce platforms.

Conclusion: A Booming Market with Strong Innovation

The global gift card market is on a strong growth trajectory, driven by the rise of e-commerce, AI integration, corporate incentives, and digital payments. Open-loop and digital gift cards will continue to dominate, while FinTech partnerships and AI-driven personalization will further enhance market dynamics.

As businesses focus on improving flexibility, security, and user experience, the future of gift cards looks promising, offering more convenience, personalization, and accessibility for consumers worldwide.