# Gift Card Reward

> Learn how gift card rewards work in referral programs, when they beat cash or credit, what amounts to offer, and how delivery and taxes are handled.

- URL: https://growsurf.com/glossary/gift-card-reward/

---

[← View All Terms](/glossary/)

A gift card reward is a referral or loyalty incentive paid as a digital gift card instead of cash, account credit, or a discount. The recipient usually picks the retailer or brand they want, and the card is delivered by email.

Gift cards are one of the most common [referral rewards](/glossary/referral-reward/) because they solve a problem cash and credit cannot: they work for people who are not your customers. A B2B referrer who recommends your software never buys it themselves, so a discount is worthless to them. A $50 gift card is not.

### Why Gift Cards Work

- **Universal appeal:** A choice of retailers covers almost everyone, and the recipient picks what they actually want.
- **Feels like a gift:** Cash reads as a payment. A gift card reads as a thank-you, which fits the tone of a referral program.
- **No product discount:** You reward the referral without lowering the price of your product or training customers to wait for deals.
- **Instant delivery:** Digital cards arrive by email within minutes of the reward being earned. No inventory, no shipping.
- **Easy budgeting:** You know the exact cost per reward in advance.

### Gift Card vs. Cash vs. Credit

|  | Gift card | Cash | Account credit |
| --- | --- | --- | --- |
| Works for non-customers | Yes | Yes | No |
| Needs a payout method on file | No, email only | Yes | No |
| Costs you face value | Yes | Yes | Only margin |
| Reinforces your product | No | No | Yes |

Many programs mix them: credit for the referrer who is a customer, a gift card for the referred friend, or a gift card for referrers who are not customers at all. See [double-sided referral](/glossary/double-sided-referral/).

### Choosing the Amount

Tie the amount to what a referred customer is worth. A $10 card is fine for a $30 subscription; a $200 card is reasonable for a deal worth thousands. Pay the larger amount only when the referral qualifies, for example when the friend becomes a paying customer, and consider [tiered rewards](/glossary/referral-tier/) so the fifth referral earns more than the first. Cap rewards per month or per year if your industry has compliance limits on incentives.

### Delivery and Fulfillment

Gift card rewards are normally fulfilled through a rewards provider that holds a catalog of retailers. The program funds a balance up front, the provider emails the winner a redemption link, and the winner picks a card. Fulfillment should wait until the referral has passed fraud checks, and the email should come from your brand, not the provider's.

### Taxes

In the United States, gift cards count as income at face value. Referral rewards paid to customers are generally treated as prizes or other income and reported on Form 1099-MISC once the recipient crosses the IRS threshold; commissions paid to affiliates fall under Form 1099-NEC. Keep a record of every card issued. This is not tax advice; confirm your obligations with a tax professional.

## Related Terms

[Referral Reward A referral reward is the benefit delivered to a participant upon successfully referring a new customer. It is the fulfillment of the…](/glossary/referral-reward/) [Referral Incentive A referral incentive is any reward, benefit, or motivation offered to encourage existing customers to refer new customers to a business.…](/glossary/referral-incentive/) [Referral Bonus A referral bonus is the reward or incentive given to a customer, employee, or partner when they successfully refer a new customer who…](/glossary/referral-bonus/) [Double-Sided Referral A double-sided referral is a referral program structure where both the referrer and the referred friend receive a reward after the…](/glossary/double-sided-referral/) [Referral Tier A referral tier is a structured level within a referral program that offers escalating rewards as participants reach higher referral…](/glossary/referral-tier/)

## How GrowSurf Helps

GrowSurf fulfills gift card rewards for referral programs automatically through [Tango Card](/integrations/tango-card/) and [Tremendous](/integrations/tremendous/). When a participant earns a connected reward, they get an email from your company with a redemption link and pick the card they want: top retailers such as Amazon and Starbucks or a donation to a non-profit through Tango Card, or hundreds of brands and a prepaid Visa through Tremendous. You never handle a gift card code.

You fund a balance up front and cards cost face value. Each reward pays either when the referred friend signs up or when they complete a qualifying action, and rewards go out only after GrowSurf's fraud checks. Reward limits per month, per year, or in total keep spending under control, and the Tax Center counts gift card rewards toward each recipient's reportable total for year-end 1099 filing.

## Related Blog Posts

### [Choose The Perfect Referral Program Incentives (Easy as 1, 2, 3)](/blog/best-referral-program-incentives/)

Learn why and how to choose an incentive for your referral program. Discover the best referral program incentives that will turn visitors into customers!

### [10 Effective, but Unconventional Referral Rewards](/blog/unconventional-referral-rewards/)

Choosing the right referral rewards can be tricky. In this blog, we go over 10 unconventional referral rewards that will get you thinking creatively.

### [Referral Program Costs & Referral Program ROI Explained](/blog/referral-program-costs/)

Are you a B2B or B2C company? Learn how to calculate your referral program costs and compare those numbers against the expected ROI from referred customers.

## FAQ

#### Are gift card rewards taxable?

In the US, yes. A gift card is income at face value. Referral rewards to customers are generally reported on Form 1099-MISC and affiliate commissions on Form 1099-NEC once the recipient reaches the IRS threshold. This is not tax advice; check with a tax professional.

#### What gift card amount works for a referral program?

Base it on the value of a referred customer. Common ranges are $10 to $25 for consumer subscriptions and $50 to $250 for B2B software, with the larger amount paid only when the referral qualifies.

#### Gift card or cash reward?

Cash requires a payout method such as PayPal on file and reads as a payment. A gift card only needs an email address and reads as a thank-you. Use gift cards when your referrers are not customers or when you want the reward to feel like a gift.

#### Can gift cards go to people who are not customers?

Yes. That is their main advantage over account credit or discounts. Anyone with an email address can receive and redeem one.

## Unlock the power of word-of-mouth marketing and deepen your bond with customers

Set up your refer a friend program with customer referral and affiliate program software that lowers your acquisition costs, increases customer loyalty, and saves you gobs of time.

[Launch Your Program](https://app.growsurf.com/signup)

14 day free trial No credit card required

Trusted by marketing and product teams that grow through customer, user, and partner referrals.

## Built for lean teams, scaled for category leaders

Successfully submitted!

Error! Please try again