Virtual vs Digital Gift Cards For Employee Rewards: What Is The Difference

Digital gift cards are versatile, network-powered cards that work online and in-store, while virtual gift cards are retailer-specific codes limited to online use. The key difference lies in flexibility, accessibility, and security for employees.

We've come a long way in terms of employee rewards. Not too long ago, most companies relied on physical vouchers or paper gift certificates to recognise their staff. Today, the landscape looks very different. Gift cards have become the most popular non-cash reward, preferred by 65% of employees.

The global gift card market is growing at an exponential rate of 17.1% year-on-year. However, as the market grows, so does the terminology. Employers often come across two terms: digital gift cards and virtual gift cards. At first glance, they may seem the same, but they're not.

The difference between them can affect how easily employees can redeem their rewards, whether they can use them in-store or online and how flexible the benefit really feels. In this article, let's understand what sets digital gift cards apart from virtual gift cards.

What Is A Digital Gift Card?

A digital gift card is an electronic version of a physical gift card that can be issued digitally and sent instantly via email. Think of it as an online version of a physical gift card. It contains the same number, name, CVV and expiry date, but only exists digitally without any plastic waste.

Digital gift cards are typically issued by companies like CleverCards that offer employee gift cards for businesses to reward their employees. Some companies, such as CleverCards, also allow customers to add their gift card to smart wallets like Google Pay and Apple Pay so they can use it both online and in-store.

Types Of Digital Gift Cards

Digital gift cards generally fall into two categories.

• Open-loop cards are powered by payment networks like Mastercard or Visa and can be spent anywhere across the world where the payment network is supported, offering maximum spending flexibility.

• Closed-loop cards, on the other hand, belong to a particular retail chain. These cards can be redeemed only with these specific retailers, meaning spending options are limited.

How Do Digital Gift Cards Work?

Digital gift cards are simple to use. The recipients receive their card via email with their card details and instructions to activate it. These card details can then be used across any online platform like any other debit card by entering the card number and CVV.

If the card is compatible with mobile wallets, it can also be added to Google Pay or Apple Pay, allowing in-store payments via contactless. Employees can use their digital gift card to make multiple purchases until the balance is spent or the card expires.

What Is A Virtual Gift Card?

Virtual gift cards usually come in the form of redeemable codes. These cards are often tied to a specific brand and can be used only on that retailer's website. To redeem it, the recipient often needs to create an account, enter the code at checkout and complete the purchase.

There are also more flexible virtual gift cards that can be used across a group of partner websites, offering a little more choice than single-brand cards. One added benefit of virtual gift cards is that they are easy to forward, making them convenient for quick gifting.

How Do Virtual Gift Cards Work?

Virtual gift cards are redeemed online using a coupon or voucher code. Employees simply enter the code on the retailer’s checkout page, apply it to their order, and complete the purchase. In some cases, the card balance can be split across multiple transactions until it runs out.

Key Differences Between Digital & Virtual Gift Cards

While both digital and virtual gift cards are electronic versions of gift cards from a broader lens, they differ in how they can be used for online and in-store purchases.

Cards Usage

• Digital gift cards can often be used both online and in-store, especially if they are open-loop cards powered by networks like Mastercard or Visa. Employees can shop almost anywhere, making them highly versatile.
• Virtual gift cards are typically limited to online use. Most are tied to a single retailer or a chain of websites, which restricts where employees can spend them.

Accessibility of the Cards

• Digital gift cards can be stored in mobile wallets like Apple Pay or Google Pay, making them just as easy to use as a contactless debit card in-store.
• Virtual gift cards are usually codes entered at checkout, meaning they can’t be tapped in-store or added to mobile wallets. This makes them slightly less convenient for everyday use.

Card Security

• Digital gift cards come with card numbers, expiry dates, and CVVs, offering the same level of security as standard debit or credit cards. Since they can be stored in secure mobile wallets, there’s less risk of loss or misuse.
• Virtual gift cards are often simple codes that can be copied, shared, or forwarded easily. While this makes gifting flexible, it also increases the risk of unauthorised use if the code falls into the wrong hands.

Virtual vs Digital Gift Cards: Which Works Best for Employee Rewards?

Both digital and virtual gift cards have their place. Virtual gift cards can work well for niche gifting, but they come with restrictions. Digital gift cards, on the other hand, give employees true flexibility and choice.

Why CleverCards Is The Smarter Solution When It Comes To Gift Cards

CleverCards offers the best digital gift cards and makes them even smarter for employers with features like:

• Tax-free rewards: Save up to €1,500 per employee each year through the Small Benefit Exemption Scheme.
• Instant delivery: Cards can be sent to employees’ email addresses in seconds. No printing, no paperwork.
• Maximum flexibility: Powered by Mastercard, CleverCards can be used anywhere in-store or online that accepts the network.
• Happier employees: Employees gain freedom of choice, making the reward feel personal and meaningful.

By choosing CleverCards, businesses give employees the freedom they want, while gaining the efficiency and compliance they need.

Want to learn how a digital prepaid card is the right fit for your business? Fill out the form below for a free demo.