Gift card programs are more than a seasonal tactic or loyalty perk. For many enterprise businesses, they are a powerful commercial tool—used to drive revenue, build brand loyalty, and streamline disbursements. Whether you're looking to incentivise customers, reward employees, or expand your prepaid offering, the structure of your program matters. And that's where understanding the difference between open and closed loop gift cards becomes essential.
In this guide, we’ll explore both models, break down the essentials of launching and scaling a program, and show how Edenred Payment Solutions offers the tools needed to bring it all together.
What are open and closed loop gift cards?
Let’s start with the basics.
Open loop gift cards are typically branded with a major card network like Mastercard or Visa. They can be used anywhere that accepts that network—both in-store and online. In essence, they function like debit cards with a fixed balance. Because of their flexibility, they’re often used for wide-scale incentives, employee rewards, or as replacements for expense reimbursements.
Closed loop gift cards, on the other hand, are only redeemable at a specific retailer, brand, or ecosystem. Think of a coffee shop gift card or a branded e-gift card for an e-commerce store. These cards drive spend back to a single business, reinforcing customer loyalty and encouraging repeat visits.
The choice between the two depends on your goals. Open loop cards are about flexibility and reach; closed loop cards are about control and brand engagement.
Key components of a successful gift card program
No matter the model you choose, launching a successful gift card program requires attention to several interconnected parts:
1. Branding and user experience
Your gift card is an extension of your brand. From the physical card design to the digital activation journey, every touchpoint should feel cohesive. For open loop programs, co-branding with a card network must be carefully managed. With closed loop, you have more freedom to shape the customer experience.
Beyond aesthetics, think about convenience. Can recipients easily check their balance? Is redemption frictionless? A sleek user experience can elevate the entire program’s perception.
2. Distribution and scalability
Will your gift cards be physical, digital, or both? Are they sent individually or in bulk? Can you automate issuance via API?
These are questions that will define your operational model. Closed loop programs are often easier to distribute at scale through e-commerce or POS integrations. Open loop cards, particularly for rewards or payouts, benefit from embedded distribution within employee portals or customer apps.
With Edenred Payment Solutions, businesses can tap into a fully integrated issuing and distribution network that scales with their needs—whether that’s delivering 10 cards or 10,000.
3. Regulation and compliance
Regulatory requirements for gift card programs can be complex, especially for open loop models.
Businesses need to consider:
- AML and KYC checks
- PCI DSS compliance
- Consumer protection laws
- Expiry date regulations and dormant funds management
This is where partnering with a compliant, regulated issuer becomes crucial. Edenred Payment Solutions supports with the heavy lifting—from licensing to fraud prevention—so businesses can focus on growth without tripping regulatory wires.
4. Data and reporting
Insight is everything. Understanding how, when, and where your gift cards are used can unlock powerful business intelligence.
Open loop cards provide visibility into broad spending patterns, while closed loop cards help you understand customer loyalty behaviours. Real-time reporting enables businesses to optimise their campaigns, forecast more accurately, and refine their reward strategies.
Edenred Payment Solutions offers a comprehensive reporting suite, giving businesses the data they need to make confident decisions.
Use cases: where gift card programs drive value
Gift cards aren’t just about gifting. Here are a few enterprise use cases where they become a core part of the value chain:
- Customer acquisition and retention: Offer branded prepaid cards as welcome rewards or loyalty boosters.
- Employee benefits: Replace cash bonuses or expense reimbursements with open loop cards that offer more flexibility.
- Insurance payouts: Disburse small claims quickly and securely with prepaid cards.
- Retail ecosystems: Keep spend within your brand by offering closed loop gift cards during seasonal promotions or product launches.
Scaling your program with Edenred Payment Solutions
Traditional gift card systems can be fragmented. One provider for issuance, another for compliance, another for user experience. This patchwork model slows down innovation and adds unnecessary risk.
With an embedded infrastructure, you can launch and manage your entire program—from BIN sponsorship and card issuing to balance management and fraud monitoring—all within one platform.
Edenred Payment Solutions provides exactly that: an end-to-end solution built for enterprise-scale businesses. Whether you’re launching a branded prepaid card or scaling a rewards program across markets, Edenred Payment Solutions handles the infrastructure behind the scenes.
With capabilities including:
- Embedded card issuing and management
- Regulatory compliance and fraud monitoring
- Custom branding and seamless integration
- Digital and physical card support
- API access for real-time control and automation
...businesses can move from concept to launch quickly, and adapt as their needs grow.
Final thoughts
Whether you're exploring your first closed loop program or looking to scale an open loop rewards initiative, the underlying infrastructure will define your success.
By choosing Edenred Payment Solutions as your partner, you gain not just the tools to issue gift cards—but the expertise and infrastructure to build a program that’s scalable, compliant, and commercially impactful.
Level up your gift card solution
If you're ready to launch or optimise your gift card program, explore how Edenred Payment Solutions can help you get there faster and with full confidence.
