Employee Gifts

What's The Difference Between Gift Cards vs Prepaid Cards

June 2, 2022
min read

The world of employee rewards is brimming with choice. While thinking about how to show appreciation to your employees, you may be asking yourself about the difference between gift cards vs prepaid cards. 

These cards are both good ways of showing your employee that you are happy with their hard work. 

Gift cards and prepaid cards are modern ways of providing flexible gifts that really work for your employee. They have the advantage of being a monetary gift without the pressure of being a regular bonus. 

They’re also a fun way to celebrate important events like birthdays or work anniversaries.  

While gift cards and prepaid cards may seem similar, there are some key differences. The most important difference lies in the flexibility of each card. 

What Is A Gift Card?

Most of us are familiar with traditional gift cards, also known as “closed-loop” gift cards. These are issued by retailers and can only be redeemed at the retailer that issued them. This creates a “closed-loop” for the retailer. 

Sometimes you can also redeem the gift card at an affiliated retailer. There has been a move to more flexible gift cards, called “open-loop” gift cards, which you can redeem at a wider variety of places. 

Gift cards can be quite limiting in terms of how your employee can redeem them, but they are still reasonably thoughtful gifts. 

When choosing a gift card, you need to be certain that your choice of retailer matches up well with the interests, needs, and wants of the recipient. 

However, gift cards do offer some flexibility and freedom for your employee to choose their reward from at least one supplier or sometimes a few. This is much better than getting a bland and generic gift. 

Gift cards are generally single-use. Once the available funds are finished, the card can no longer be used. If the funds don’t get used though, they can be lost, including when the card expires.

Related: What To Put In An Employee Appreciation Gift Box

What Is A Prepaid Card?

Prepaid cards are much more flexible and safe than a gift card. These are cards issued by financial services institutions and preloaded with an amount of money.

They function similar to a debit card but are not attached to a checking or savings account. The money only exists on the card. 

These cards can be used to make online or in-person purchases, similar to gift cards. One of the major advantages of prepaid cards is that, unlike gift cards, they can also be used to pay your bills or withdraw money from an ATM. 

This provides your employees with a high degree of flexibility. The gift they receive in the end is closely tailored to their specific needs and wants. It highlights how much you care about each employee as a person and that you acknowledge their freedom of choice. 

Unlike gift cards, prepaid cards can generally be reloaded once the funds are depleted. They also feature the security that comes with being backed by a bank. 

If the card is a physical one, it has a number and expiry date printed on it. Additionally, they require a pin code to use. Virtual prepaid cards are also available, which are more secure and environmentally friendly than plastic cards. 

Unlike with gift cards, the funds on prepaid cards don’t usually expire.

Deciding Between A Gift Card vs Prepaid Card

Employee rewards are an important part of improving productivity and reducing high employee turnover. When deciding what kind of employee rewards to choose, you need to think carefully about your aim and how best to achieve that. 

Things like gift cards and prepaid cards are a good form of employee rewards because they allow the employee to have more control over their gift. However, with a gift card, the recipient is limited in terms of what they can do with their reward. 

With important people in your life, choosing a gift card that matches their personality can be easy. With your employees, you’re much more likely to make a mistake and give someone a gift card they don’t really want or need.

While “open-loop” gift cards offer more flexibility than their “closed-loop” counterparts, they don’t offer any advantages over prepaid cards. 

When looking specifically at employee rewards, prepaid cards are a better option due to the higher amount of flexibility. Show that you value your employees by allowing them the freedom to choose a gift that they really value.

The other aspect that makes prepaid cards ideal for employee rewards is the fact that this money can be put towards bills or withdrawn as cash. This additional flexibility shows how much you value your employee as an individual with a life outside of work, rather than just someone who works for you.


The old adage “It’s the thought that counts” might be true most of the time.

Companies like PerkUp are specifically designed to help you provide the best employee gifts and rewards. They help you meet both your needs and the needs of your employees. 

By providing your employee with meaningful rewards, you are showing them and their colleagues that hard work pays off.

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