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Digital gift cards are upending traditional approaches to incentives and rewards, even creating exciting new use cases. And while Tillo isn’t a household name in the space, it powers many of these transformative experiences through a plug-and-go API that connects to more than 3,000 global brands.
Tillo founder and CEO Alex Preece said traditional rewards systems were mostly physical. That began to change at the start of the COVID-19 pandemic, when digital gift cards became a primary means of payment, not just for rewards and incentives. In the United Kingdom, gift cards were used for food benefits that were normally delivered at school.
Strictly physical reward systems don’t cut it in an era of cryptocurrencies, global commerce and high expectations. Consumers expect instantaneous, high-quality service and have also come to expect rewards. Why not bundle them together?
The power triangle: How everyone can win with digital gift cards
Imagine having an overseas relative who needs tires for their car. You order a digital gift card and get points for doing so. The relative gets the funds without typical transfer fees and in a more personal way. Brands acquire new customers. Preece called it the power triangle.
“How do you make them use a certain payment method? You have to give them an incentive to do that,” Preece said. ”(Digital) gift cards are great ways of capturing a customer and giving them something that’s quite meaningful, that they can get more from.”
Preece said the top 30 American “everyday spend” brands represent trillions of annual spend. These are the perfect ones to offer digital gift cards, given the current economic strain many feel.
“It’s making people’s paychecks go further, that’s what we’re seeing,” Preece said. “The average American is living paycheck to paycheck, and using gift cards for rewarding loyalty, gives an 8% discount.”
“It’s enabling them to save and be rewarded for meaningful things in their lives.”
Offering relevancy in a sea of brands
With so many brands on offer, how does Tillo place the most relevant ones at the top of the list? AI helps sort through the options to deliver the most gender- and age-appropriate ones.
Open banking will also help. Preece said many partners are connected to Plaid or similar services. This helps deliver relevancy.
In a globalized economy, Tillo enables business travellers, tourists and immigrants to easily transact in new regions or to send funds back home.
“If you step off the airplane at Heathrow and go into your Chase app, or you’re alerted by your Chase app that you could save quite a significant amount of money, but it’s by moving some points or something onto an Uber local digital gift card, you might go ahead and do that,” Preece said. “That’s what partners are doing. They’re leveraging the global connectivity of someone like us that can pull in content from all these different countries at the right moment in time for that consumer.”
“Consumers are travelling all over the globe, and they want to see relevance in that given market. It can’t just be ignored anymore.”
How open baking can drive digital gift card growth
How will the movement to open banking in the United States help brands? Preece advised them to look at their UK peers. Across the pond, brands have added relevancy and leverage it through innovative promotional mechanisms. They can attract new customers and re-engage with dormant ones.
“The open banking infrastructure here in the UK… is layering on this, this incredible innovation, and this middle layer that the brands in our world can leverage to talk to consumers in much more meaningful ways than they have been done before,” Preece said. “You can just be so much more sophisticated with it. It doesn’t just enable payments to move real-time like it does here in the UK, but you can do some very clever things in terms of saving applications, investment applications.
“For us, the most exciting thing is that brands can be a lot smarter with driving incremental spend and driving net new customer spending into their stores. Also, the payment soundscape in general. I pay on my credit card, or it’s a $15 charge to send money to each other. That’s a bit of a racket; it’s very antiquated.”
Brands are also using digital gift cards to reduce delinquency. In the United Kingdom, a social housing provider rewards on-time rent payments with a percentage discount that’s applied to digital gift cards. Preece said these typically are people ineligible for rewards cards or who don’t have the applicable banking setup.
“We’re seeing these use cases coming to life where, again, it’s a win for the consumer, because they’re getting something very meaningful to make their paycheck go further. The brand is getting net new customers, and the social housing provider benefits because it’s driving down their bad debtor bill, and they’re giving a reward to their consumers for paying their rent.”
Preece said the same principle can be applied to mortgage payments, where everyday spending rewards can be applied. The savings over 25 years quickly accrue.
When properly designed and applied, rewards benefit all involved.
“You can move it very quickly onto a digital gift card and just go and spend it immediately, which is really nice,” Preece said. “I know I would rather get a gift for a brand that I’m going to shop at, I’d rather that than having to go to the bank and cash the check. It’s just much easier.”
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