“We make our money from the options that recipients choose, such as Amazon and Visa.”
When you see a comment like that; run!
Incentive rewards companies are costing you serious money while promising you “free” delivery.
Your loss is their gain. And they don’t really have any incentive to ensure that gift recipients use their awards. And when recipients don’t claim their awards, guess who keeps the funds?
Incentive reward companies often promote their services as “free.” The big claim is that they only earn revenue when recipients select certain options like Amazon or Visa gift cards. However, this model can obscure the true costs and profit mechanisms involved.
There are several hidden ways that incentives companies make money. Here are a few:
Breakage (Unredeemed Rewards)
A significant portion of distributed gift cards go unclaimed. A 2024 Bankrate study showed that up to 43% of U.S. adults have at least one unused gift card, voucher, airline or food delivery service voucher, or store credit. In 2022 unused gift card value in the U.S. amounted to over $21 billion. This unredeemed value, known as “breakage,” becomes profit for the incentive companies, providing them little motivation to ensure recipients use their rewards.
Markup on Rewards
By steering recipients toward specific vendors, incentive companies may receive commissions or discounts from those retailers, further profiting from the choices made by recipients.
Some platforms mark up the cost of gift cards, merchandise, or travel redemption even when they claim to be “face value.” The end-user and incentive recipient think they’re getting a $100 reward, but the incentives company only paid $95 for it.
Incentive companies may apply markups or fees to the gift cards they distribute. Cards like Visa or Mastercard often come with activation or transaction fees, which erodes the value received by the end-user.
Expiration and Dormant Account Fees
Balances on cards may expire after a certain period, which goes back to the issuing company. Dormancy fees may also apply. When a participant doesn’t use the card for a certain period, inactivity fees may be deducted. This charge can vary and be $2.95 or more per month. A $50 card with no activity for six months could be stripped of value and reduced to $32.30 after charging monthly fees.
These penalty structures boost profitability while seriously annoying recipients.
Non-Refundable Models
Many vendors operate on a non-refundable basis, meaning once a gift card is issued, the cost is incurred regardless of redemption. If recipients don’t claim their rewards, the unused funds are not refunded and returned, leading to wasted money and budget inefficiencies for organizations.
Limited Redemption Options
Incentive companies may receive commissions or discounts from specific retailers, and may limit incentive selection toward just a few vendors, further profiting. Recipients may notice the price disparity between the incentive as offered and what is available on the open market, possibly eroding trust.
Lost Leftovers / Lost Value
Some incentive companies let recipients pick from a list of reward options. But if they don’t use the full value of the reward—by choosing something cheaper than the total reward—the leftover amount just disappears. They can’t use the remainder later, and the difference doesn’t go back to the originator either. Recipients don’t get the full value of the delivery.
Ted Rossman, Bankrate
“Sometimes we’re our own worst enemy when it comes to gift cards. We relegate them to the back of our wallet or stuff them in a junk drawer, never to be seen again.”
Many incentive companies don’t want recipients to redeem rewards. If the incentive company profits from breakage, unredeemed gift card value, or markup margins, they just don’t have a strong financial reason to push for redemptions.
Gift cards are very popular for their convenience and perceived value, but unredeemed cards and associated fees can result in wasted budgets. A key take-away is to choose incentive automation providers with an eye towards transparency and economy.
Refundable
Opt for vendors that offer refundable options for unclaimed rewards, ensuring funds are not lost if recipients don’t redeem their incentives.
Variety
Offer variety and provide a range of reward choices to cater to diverse preferences and to maximize redemption rates and satisfaction.
Reminders
Make sure to monitor redemption rates and send multiple reminders for unredeemed incentives. Regularly track how often and promptly recipients use their rewards to assess the effectiveness of your incentive program.
Full Value
Let recipients use 100% of their incentive with MultiSelect. Mix fixed and flexible value options so nothing is left on the table—just full choice, complete flexibility, and total value.
The right Incentive Automation organization eliminates the adversarial relationship where success isn’t dependent on poor delivery claim rates.
You want recipients to redeem awards! Multiple incentive options, better delivery features, compelling end-user engagement options and post claim follow-up messages maximize the value of your deliveries.
The merchants represented are not sponsors of the rewards or are otherwise affiliated with TruCentive. The logos and other identifying marks attached are trademarks of and owned by each represented company and/or its affiliates. Please visit each company’s website for additional terms and conditions. TruCentive© 2025
