Highlights from our conversation with Alex Preece, CEO of Tillo
The term gift card is doing a poor job of describing the business it has become.
It still suggests a plastic rectangle bought in a hurry for someone whose tastes you don’t quite know. But much of the activity Alex Preece and I discussed has little to do with gifting. A bank helps a customer save on groceries. An employee benefits app stretches a paycheck. A mortgage app turns everyday shopping into an overpayment on a home loan.
The mechanism behind each of them may be a digital gift card. The product the customer experiences is something else entirely.
That distinction matters because the gift card has quietly become a way to move retailer-funded value into a specific purchase. It can be issued instantly, for a precise amount, through an app the customer already uses. It can make a purchase cheaper, make a benefit easier to distribute, or give an ordinary shopping trip a larger financial purpose.
The industry still talks about gift cards as a category of things. It may be more useful to think of them as a set of capabilities. And those capabilities are beginning to change how rewards work.
What changed when the card disappeared
Digitizing a gift card sounds like a modest improvement. Remove the plastic, email the code, save the postage. Early digital programs often worked much like physical ones: procure cards in fixed denominations, hold the inventory, then distribute it.
Open-value issuance through an API changed the design possibilities. A platform could request the amount needed for a transaction, even down to the penny, and deliver it at the moment of purchase. Value no longer had to be packaged weeks earlier in increments of £10 or £25.
That shift is more consequential than it first appears. A fixed-denomination card asks the customer to adapt to the reward. An instantly issued, exact-value card lets the reward adapt to the customer’s purchase.
It also allows the gift card to disappear into a broader experience. Someone using a bank app, benefits platform, or cashback wallet may see a useful saving and act on it without thinking about gift card procurement or issuance. The best infrastructure is often invisible to the person it serves.
Retailers have a reason to care about this channel. Merchant-specific value can bring spending back to the retailer, and the retailer can choose which programs and audiences receive an incentive. Platforms have a reason to care because they can offer tangible value without building individual integrations with every brand. Customers have a reason to care when the benefit shows up where they already spend.
Those interests overlap. They are not identical. That is where the real strategy begins.
A discount is more interesting when it has a destination
One of the most striking examples in my conversation with Preece was Sprive. The app helps mortgage holders use savings from everyday shopping to make overpayments on their loans. Tillo supplies the retailer gift card infrastructure behind that shopping benefit.
On its own, a small percentage back from a grocery purchase is pleasant but forgettable. Directed toward a mortgage, it becomes part of a larger financial goal. The amount earned on Tuesday’s shopping trip may be modest. The customer understands why it matters over time.
This is a challenge to a deeply embedded assumption in loyalty: that the reward is the outcome.
Most programs still follow a familiar sequence. Do something valuable for the business. Earn points or cash back. Visit a rewards destination. Decide what to claim. Transaction complete. The customer may enjoy the benefit, but the program has little to say about what happens next.
Sprive asks a different question: What if the reward could help the customer accomplish something outside the retailer’s own program?
That is a more demanding design problem. It requires understanding what a customer values beyond the immediate purchase. But it also offers a path out of the interchangeable world of points, discounts, and redemption catalogs. A reward applied to a purpose can feel more substantial than a reward of the same monetary value left sitting in an account.
There is a commercial discipline here, too. A good story about customer benefit does not, by itself, establish a good business for the merchant funding it. The retailer still needs to know whether the incentive wins a visit, increases a basket, keeps a customer, or shifts spending from a competitor. If it merely discounts purchases that would have happened anyway, the economics become harder to defend.
That is the tension at the heart of modern rewards. The customer needs a benefit worth noticing. The merchant needs a change in behavior worth buying.
Distribution can serve a public purpose, too
The pandemic offered a very different test of digital voucher infrastructure. Free school meal support needed to reach families quickly while limiting purchases to eligible categories. Digital vouchers helped distribute that support at scale.
This use case belongs in the same conversation as cashback and loyalty because it reveals what the underlying technology can do. Value can be delivered to a defined group, made available quickly, and governed by rules attached to its use.
That power calls for judgment. Restrictions can help ensure public benefits serve their intended purpose. They can also create difficulty for recipients if the rules, participating merchants, or redemption process fail to match real life. The useful question is not simply whether the technology can control spending. It is whether those controls make the benefit more effective for the people meant to receive it.
The same question applies in commercial settings. Precision is valuable when it makes a reward more useful. It becomes less attractive when a customer must decipher terms, navigate a separate portal, or discover at checkout that the promised value does not apply.
A reward that is technically available but difficult to use is a weak reward. The quality of the experience is part of the value.
More brands do not automatically mean more relevance
Gift card networks often compete on the size of their catalogs. That makes sense as a measure of distribution. A platform with access to thousands of brands can serve more clients, markets, and customer preferences.
But catalog size tells us little about the customer experience.
If I regularly buy groceries at one retailer, travel on a particular route, or stay with the same hotel group, why should I search an A-to-Z directory to find a useful offer? Banks and fintech apps already sit close to spending behavior. Their opportunity is to present a small number of relevant choices when those choices might affect a decision.
That is harder than filling a rewards page. It requires care with data, timing, offer economics, and customer trust. A platform cannot assume that because it can infer a likely purchase, the customer wants a prompt every time they open the app. Relevance includes knowing when to stay out of the way.
It also requires honesty about whose interests determine what appears. The offer with the best margin for a platform may not be the best offer for its customer. If a rewards experience consistently favors the economics of distribution over the usefulness of the reward, customers will notice, even if they never see the underlying margin.
The strongest programs will make those interests work together. They will help customers find real value in purchases they intend to make, while giving merchants a credible reason to fund it.
Reloading changes the relationship
Reloadable digital gift cards are a natural next step. Instead of issuing a new credential for each purchase, a platform could add value to one a customer already uses. For someone who shops frequently with the same retailer, that could remove much of the repeated effort involved in buying and redeeming digital cards.
But convenience alone is not a merchant strategy.
Imagine a retailer offering an always-on saving to its most committed customers. Those customers may love it. The retailer may simply be paying a new toll on existing sales. A more selective program might use reloadable value to increase shopping frequency, recover customers whose spending has fallen, or encourage members to consolidate purchases with the brand.
The technology makes those approaches possible. It does not decide which one is sound.
That distinction gets lost whenever a new rewards capability is presented as an inevitable engagement engine. A seamless experience can make a good incentive more effective. It can also make a poorly targeted incentive more expensive.
The real shift
Preece’s account of Tillo’s evolution points to something larger than the growth of digital gift cards. Infrastructure that once moved predetermined amounts of merchant value is moving closer to the point where a customer decides how, where, and why to spend.
That puts rewards in a different position. A benefit can appear inside a financial product, support a household goal, or make an everyday purchase more affordable. It can be delivered at the moment it is useful instead of waiting in a catalog for someone to discover it.
It also makes the important questions sharper: Who funds the value? Who decides when it appears? How easy is it to use? What does the customer actually gain? And what changes for the merchant as a result?
The gift card has escaped the gift aisle. Whether it becomes a more intelligent form of reward depends on how well the industry answers those questions.
