Northern Ireland has a great idea – give everyone a gift card


Northern Ireland’s Finance Minister has announced that, as part of a £300m support package for business, they will earmark £95m for a high street gift card scheme.

While the details haven’t been hammered out yet, we do know the scheme will deliver prepaid high street gift cards to individuals in Northern Ireland.

We think it’s a sensational idea.

Cash is not always king

Many people will ask why a gift card scheme is better than just giving businesses the money. It might seem like a more ‘common sense’ idea, but a gift card scheme does much more than just move money from public to private bank accounts.

Gift cards not only generate extra cash flow for businesses, they spur other spending moments beyond their main purchase. Someone who pops out to Argos to spend a gift card is likely to pay for public transport, parking, a coffee, perhaps even a meal while they’re out. They might even make some secondary purchases on top of their gift card value.

Distributing vouchers also ensures businesses carry on operating like businesses – they still need to employ staff, which drives money back into the pockets of their workers. It also means the business still needs to source stock, pushing revenue to their suppliers as well.

The goal is to spur more activity in brick-and-mortar retail and hospitality, and we think this scheme has an excellent chance of doing exactly that.

It’s the same for business rewards

We see a similar effect when employees are issued cash as a reward. The extra money is absorbed into an employee’s monthly pay, and often ends up paying down credit cards, or paying a bill. There’s no novelty, or sense of the cash being a real “treat”.

As a result, just moving cash around doesn’t produce any tangible emotional benefits for staff, and it still doesn’t produce an immediate benefit for the wider economy.

On the other hand, closed-loop rewards like gift cards prompt someone to spend their reward on something special by limiting where it can be used (hence the term closed-loop).

It’s one of the biggest reasons so many companies come to us instead of just issuing a bonus to staff. Even modest amounts of cash can be turned into special moments by making sure recipients spend them on a gift instead of a gas bill.

The scheme is very exciting, and we’ll be keeping an eye out to see how well it helps the high street. In the meantime, however, there’s something the whole UK can do to produce a similar effect without having to earmark money for vouchers.

Back the #GiftCard500 campaign

Alongside the Gift Card and Voucher Association (GCVA), Love2shop are supporting the government lifting the limit on the Trivial Benefits Allowance (TBA) from £50 to £500.

The TBA allows businesses to reward their staff with up to £50 a year in gift cards tax-free. An equivalent reward in cash would cost a business up to £40 per employee on top of the £50 gift. By making those rewards tax-free, employers are incentivised to offer non-cash rewards to their staff at Christmas.

By switching from cash to a closed-loop product like a gift card, the money works harder for everyone. Instead of disappearing into savings accounts or settling gas bills, it goes back into our economy through retailers and restaurants.

Given the UK gift card industry is worth more than £6bn a year, there would be huge benefits to business, customers and brick-and-mortar retail alike by raising the threshold. If you’d like to share the campaign, or get behind it yourself, you can find the GVCA’s petition here.