Top 5 Key Differences between Gift Cards and Wallets

In this article, we will check the main differences between Gift Cards and wallets.

Gift cards are mainly used for gifting purposes. They have rapidly become a staple and thoughtful way to provide someone with the freedom to choose.

Gift cards are often given as presents for special events like birthdays and anniversaries.

They are used primarily in domains or sectors such as Retail stores, restaurants, entertainment, and for charitable donations as well.

Magento 2 Gift Cards can be easily generated and sold as vouchers similar to normal products.

Statista reports show that the Gift card market value has increased exponentially and is poised to reach a value of 510 Billion US Dollars by the year 2025.

Wallets can be termed as applications that are developed for websites, smartphones, or electronic devices that simulate a physical wallet in terms of loading money and storing other essential information.

With a simple tap, e-wallets can be used to make payments and carry out purchases.

It also incorporates technologies like NFC(Near Field Communication) for contactless payments.

Wallets can also be used to store information such as coupons, tickets, digital IDs, boarding passes, etc.

Some examples of digital wallets are Apple Pay, Google Wallet, and Samsung Pay which are used worldwide.

Wallets can also be used to pay partial payments in case sufficient money is not available in it, then, a secondary payment can be combined with it to pay for the purchase.

So, using Magento 2 Wallet Extension enables customers to process their payments using their wallet amount at checkout.

As per a recent Gminsights report, the market share of mobile wallets from the tech companies segment that includes Apple, Google, and Samsung is set to grow at a CAGR of 18% between 2023 and 2032.

In addition to Gift Cards and Wallets, Reward points are also an excellent way to incentivize customers and can be used to pay for purchases.

They can be earned and then redeemed at the checkout accordingly.

Also, if you are looking for a reward point module for your store, then you can check the Magento 2 Reward Points extension.

Now, that we’ve some knowledge about Gift Cards and digital wallets, let’s check some of the key differences that set them apart from each other.

Usage:

Gift Cards can be used in both physical and digital forms. Usually, the physical cards are made of plastic or the gift card code is delivered electronically.

On the other hand, Digital Wallets as their name suggests are solely software applications made for smartphones or other smart devices.

Adaptability:

Bearing limited use, Gift cards are mainly restricted to specific stores or brands.

However, digital wallets or e-wallets offer a broader spectrum of usage and can be utilized across various stores, brands, and platforms that accept the specific wallet service thus offering better adaptability.

Management & Tracking:

Tracking balance and checking spending history can be a major challenge in Gift Cards unless the issuer of the gift card provides online tools.

This can lead to funds being lost or forgotten.

Since Digital Wallets are software-based, they can provide real-time metrics such as balance, spending or transaction history, etc.

This is effective in helping the user in budget management and making informed financial decisions.

Validity:

Gift Cards normally have an expiration date associated with them.

This means, the amount which is pre-loaded onto it is rendered invalid after the expiration date is passed.

The major limitation associated with Digital Wallets is the availability of merchants participating with the specific wallet.

Fund Source:

Gift Cards are pre-paid and cannot be connected to any bank account since they are locked in with a set amount.

Also, if you want to fund source for a cause, then, you can also check the Magento 2 Crowd Funding extension.

Digital Wallets can be linked to a bank account(s). It thus allows the direct transfer of funds from a bank account to the wallet.

Then it can subsequently be used for payments.

Both Gift Cards and Wallets are paving the future for how payments are made.

Gift Cards offer an excellent appeal for gifting purposes.

Digital Wallets strengthens itself with its financial management capabilities along with offering flexibility and security. 

It is worth noting that technology is always evolving.

So, there is a lot left for both gift cards and digital wallets to offer in the future.