A consumer receives a gift card, spends part of it a month later, and then leaves the remaining balance in limbo on a forgotten or misplaced card. For merchants and gift card programs, this kind of breakage has long been viewed as an unavoidable part of offering prepaid products.
But what if those lingering balances represented an opportunity rather than an inevitability?
As Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, explored in the Speed Matters in Gift Card Redemption: Snapshots from Javelin’s 2026 Prepaid Consumer Sentiment Survey report, retailers and issuers can unlock far more value by encouraging consumers to redeem their gift cards faster. The payoff goes beyond putting unused balances back in circulation. Faster redemption can drive recurring visits, bolster brand loyalty, and increase spend—all behaviors merchants have long sought to foster in their customers.
Driving Recurring Traffic
The clearest opportunity may be hiding in what happens after the gift card is redeemed.
Javelin’s annual survey tracked current trends in gift card redemption and the consumer traits associated with faster spending.
What Hirschfield discovered was that shoppers who spent gift cards faster shared many commonalities. These trends extended across all prepaid product types, from retail gift cards to open-loop cards powered by credit card companies.
One of the most meaningful connections was to increased foot traffic. Approximately 30% of shoppers who have received a retail gift card as a gift will visit the brand’s brick-and-mortar stores more often. Among consumers who redeem within a week, that figure rises to 40%.
The pattern holds online, too. Roughly 37% of gift card recipients become recurring website visitors, while around 43% of shoppers who redeem within the first two weeks visit the brand’s website often.
For merchants and issuers, the takeaway is straightforward—speeding up redemption can help turn a one-time gift into a reason to come back.
“That’s where you start to get those other behavioral traits of visiting the store more often. And not just visiting, what that leads to is being more loyal, participating in membership programs, and things like that,” Hirschfield said.
Finding Stored Value
That relationship between redemption speed and engagement becomes even more relevant as prepaid products move beyond gifting.
Self-use has become one of the most important evolutions in prepaid, with consumers purchasing stored-value products for themselves rather than waiting to receive them as gifts.
Starbucks was one of the trailblazers for stored-value accounts, which are effectively digital gift cards purchased by the user and for the user. Over the past few years, these accounts have become a mainstay across many sectors, largely because of their potential to foster brand loyalty.
And the most engaged self-users appear particularly valuable. Almost 45% will visit a store more often if they have a gift card, compared with 47% of self-buyers who redeem within one to two weeks.
“Not only is it if you get it as a gift and how quickly you spend, but when you home in on that self-user, they are also showing that behavioral trait,” Hirschfield said. “They are willing to buy this for themselves, use it quickly, and exhibit traits that are beneficial. You get into spending more than you normally would and trying brand-new products, these are all important to keeping that relationship fresh and vital with the consumer and the retailer.”
The challenge, then, is less about getting consumers to use prepaid products and more about giving them a reason to use them sooner. Incentives can play a major role. One of the main reasons consumers redeem gift cards quickly is to take advantage of a promotion or reward.
That can mean relatively simple offers, such as buy-one-get-one discounts or promotions tied to a specific category. But the impact is greater when those incentives are personalized to the individual consumer.
“We’ve gathered enough data on you because you are a member of our loyalty program and you’re uploading these gift cards to our app,” Hirschfield said. “We know the types of things you buy, but maybe you haven’t tried something else. So, let’s give you a promotion to try something new. These are all types of strategies you can use to home in on how to create this behavior on a fully cyclical and a repeatable basis.”
Digital Wallet Synergy
The push toward faster redemption also creates a natural connection between prepaid products and digital wallets.
Technology such as digital payments and mobile apps has helped make that connection possible, but the humble physical gift card remains an important part of the equation. The continued preference for physical products means prepaid programs should offer consumers optionality rather than forcing them into a single format.
“The physical gift card is still important, especially when you’re giving a gift,” Hirschfield said. “That tactile experience of receiving that gift is important, but it’s that secondary step now. Consumers are demanding that you have that ability to provision that gift card into your digital wallet, be it a generic wallet, an Apple wallet, or a Google wallet. Or with a lot of retailers, it’s into their own wallet or app.”
Digital wallets have already been deployed to great success in frequently visited businesses like fast food and coffee shops, while many retailers have brought rewards and prepaid products together within their app experiences.
That convergence can do more than simplify payments. Giving consumers the ability to provision physical gift cards to their digital wallets can also make those balances easier to access—and therefore easier to spend.
“You’re encouraging that opportunity to engage the consumer because it’s uploaded and it’s there,” Hirschfield said. “It’s at the ready, versus carrying that gift card or trying to search for it in your email if it’s a digital gift card. It’s making it easy and putting it where the consumer is in terms of their payment experience.”
Adopting a Universal Mentality
Ultimately, speeding up redemption is only one piece of a broader prepaid strategy.
Tactics that shorten the gift card redemption cycle can mitigate breakage, even if they will never eliminate it entirely. More importantly, merchants should ensure their prepaid strategy is aligned with the broader customer experience and loyalty strategy.
“When you encompass that all together and take gift cards out of a silo, you are engaging the consumer in a way that says, ‘We want you to come, we want you to come frequently, and we want you to spend more money and spend it wisely,’” Hirschfield said.
“In the current economy, when you can offer those promotions and rewards, it’s saying, ‘We respect the money you spend with us,’” he said. “Conversely, that consumer respects the relationship they have with that retailer. It’s important to have that universal mentality of how to treat the customer.”