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We’ve been tracking holiday gift cards’ performance, and year after year, they’re a top choice for holiday gift-giving. For example, our blog from eight years ago put gift card spending at over $30 billion, and since then, it has exploded to nearly $260 billion. And as the market for holiday gift cards has grown, so have the opportunities for ISVs and VARs to provide solutions.
Reasons Gift Cards Are Popular Year After Year
Several reasons make gift cards popular. Last holiday season, the biggest driver was that gift-givers knew recipients wanted them. A KPMG survey confirmed this with 48% of consumers saying they preferred receiving gift cards. It’s easy to understand. When someone gets a gift card, they can use it for what they want versus getting a gift they don’t like and having to return it.
They’re also easy for the gift-giver. They don’t require hours of searching for a gift, and they can help the giver stay on budget. They don’t have to make a trade-off if they find a gift but it costs more than expected. Gift cards allow gift-givers to spend what they plan.
Gift cards are also popular among merchants. Every holiday gift card they sell generates revenue upfront. In short, the money comes in before the inventory goes out. Furthermore, people receiving gift cards could be new customers and, if shopping or dining is a positive experience, they can become long-term customers. Gift cards can also be a strategy to draw people back after the holidays, when sales often dip, and, as TSG points out, customers often spend more than the gift card’s value.
The Outlook for Holiday Gift Cards in 2026
The good news for merchants is that analysts expect gift card purchases to increase this year. Blackhawk Network research has found that 77% of U.S. consumers plan to purchase gift cards in 2026. Over half (56%) expect to buy gift cards for themselves as part of their budgeting strategy and as a way to stretch their spending power with rewards or discounts. They’ll look for deals like the chance to receive a $20 gift card when they purchase $100 in merchandise or cards. Additionally, the 2026 TSG/Bank of America Gift Card Guide describes gift-card buying as increasingly intentional rather than simply a last-minute purchase.
Are Physical or Virtual Gifts Better for Holiday Giving?
In the 2026 holiday season, both physical and virtual gift cards matter. The TSG/Bank of America survey found that 61% of consumers selected physical gift cards, 29% selected digital cards, and 73% were open to either. One-third buy a mixture of physical and digital cards.
Most people buy physical gift cards when they plan in-person gift-giving, so they have something to put in a small package or card and give the recipient something to unwrap. Or, when consumers are browsing in stores, sometimes they choose to buy a physical gift card instead of an item. PwC research has also found that people consider physical gift cards more personal and, at a time when people are looking for screen-free experiences, may not want to go digital.
On the other hand, people tend to buy virtual gift cards when they want instant delivery and a gift that is easy to send and easy to redeem online. Ease and convenience are top of mind for the giver who doesn’t want to face holiday traffic to get the perfect last-minute gift. People also select virtual cards for their security because they never get lost in the mail.
Providing an omnichannel gift card solution allows you to equip your merchants with the ability to sell both physical and virtual gift cards to meet all customers’ expectations and maximize revenues.
The Smart Way to Meet Demand for Holiday Gift Cards
ISVs and VARs have numerous options for offering gift card solutions, but working with a payments partner with a flexible solution can help you grow your business. A white-label solution that lets you offer cards with your brand as part of the total point of sale (POS) solutions you offer. And, with the right partner, you can protect your gift card program with fraud-prevention solutions and give your merchants the option to accept gift cards with text-to-pay or memberships. A leading gift card solution will also allow merchants to preload promotions and manage all of their gift cards for all of their locations from a single dashboard.
It’s Going to Be Another Great Season for Holiday Gift Cards
Physical gift cards and virtual gift cards are both popular gifts in almost every retail segment, from retail to grocery, fuel, and services. Don’t let another holiday season go by without capitalizing on their popularity. Contact us to learn how.
FAQs
Can gift card solutions integrate with the POS systems we already provide?
When you work with a payments partner to offer a gift card solution, it follows the same integration path as integrating with its platform. If your solution integrates with the payment partner’s solution, you can also offer the gift card solution. It also eliminates the need to manage separate applications and processes.
How can we help merchants protect gift cards from fraud?
Look for solutions with fraud-prevention capabilities, secure activation, and transaction monitoring. You’ll also benefit from centralized management that gives you visibility into all activity and will alert you to suspicious activity.
Can merchants use gift cards to increase revenue beyond the holidays?
Yes. This is a good point for countering objections to adding or updating a gift card solution. Gift cards can help retailers and restaurants build revenue in slower months after the holidays because when customers return, they often spend more than the face value of the gift card. According to Pitney Bowes, many people who receive gift cards will use them in the few weeks following the holidays.
What should ISVs and VARs look for in a gift card solution provider?
You want to provide a solution with the features that merchants want and that will help you grow your business. Look for an omnichannel gift solution with fraud prevention and centralized management. Also, consider a white-label program that allows you to offer it under your own brand.
