Buyer’s guide to motivation voucher schemes

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What are motivation voucher schemes?

Motivation voucher schemes are an effective means of engaging employees, particularly when pay rises are few and far between. The vouchers carry a monetary value that can either be spent at a single store or at multiple retailers.

Motivation vouchers have been a popular way for organisations to incentivise their employees for many years, from rewarding loyalty and recognising long service, to saying a simple thank-you for a job well done. In return, staff who feel recognised and valued are likely to be more engaged and productive, and less likely to be thinking about leaving their job.

The 2022 UK Prepaid consumer survey, published in February 2023 by fintech company Fiserv, found that a third (33%) of employees said incentives and reward motivate them to be more productive at work, while 31% said that regular rewards such as gift cards would motivate them to stay with a particular employer.

Unlike cash incentives, such as bonuses, that are often added to an employee’s overall salary and risk going unnoticed, vouchers can be exchanged for cash or goods, services, or experiences through a variety of brands, delivering an instant reward that employees are more likely to spend on treats or bigger purchases.

Electronic gift cards or vouchers come in two forms: open-loop, which use payment networks such as Visa or MasterCard and are accepted at multiple retailers, and closed-loop, which are redeemable at a specific retailer or experience. Employers should be mindful of voucher schemes that enable the provider to retain the breakage, a practice that expires the voucher after a set period, typically 12 months, when the voucher becomes invalid. Some providers, including Vivup, for example, never retain the breakage, ensuring the employee can spend their voucher now or at a date they wish to use it.

Key to an effective voucher scheme is offering employees choice. Enabling them to decide how to spend their reward enhances the scheme’s motivational value. Gift vouchers can be tailored to suit the unique preferences of individual employees; from dining experiences and spa days to adventure activities and high street shopping sprees, they enable employees to choose a reward that has personal appeal. They can be particularly valuable during difficult financial times, for example, during the cost-of-living crisis, when vouchers could be used to help cover grocery bills.

The overall popularity of gift cards and vouchers remained low throughout most of 2023, according to the Gift Card and Voucher Association (GCVA) State of the nation report 2024, published in March 2024, with the number of physical gift cards purchased through work incentives or employee benefits programmes falling by 4% to 19.7% compared with the previous year. However, they bounced back in the final quarter of 2023 as employers looked for ways to reward employees ahead of the festive season after what had been an extremely difficult year. The average proportion of these buyers increased from to 21.2% in Q4 up from 17.8% the previous year.

What are the current market trends or developments?

Rising digital voucher platforms incorporating AI programmes, a growing popularity of experiential rewards, and a greater focus on holistic wellbeing are among the current and emerging incentive trends.

The motivation voucher market has evolved in recent years, with the gap between physical and digital gift card purchasing through employee benefit programmes narrowing significantly, with the digital channel offering employees greater flexibility and convenience when shopping online. This is also a reflection of the wider adoption of hybrid working by many organisations.

Many providers now offer flexible, digital platforms that allow employers to tailor incentive programmes to the needs of different groups of employees, by creating private branded stores and developing tailored recognition strategies. Voucher redemption through mobile apps and online digital wallet systems allows for easier customisation and on-the-go usage.

Another emerging trend in the motivation voucher sector is support for local, from both an employer and employee perspective. A survey carried out in October 2023 by gift card provider Miconex among its corporate customers found that 94% said supporting local was important when planning rewards and incentives, 91% said support for local contributed to their corporate social responsibility (CSR) efforts, and 76% said they supported local to take an active role in the success of the community.

The Miconex survey also revealed that while vouchers were once traditionally single-use physical gifts, many employers now want options where funds go towards shared experiences that their employees can enjoy together or donations supporting environmental causes. This appeals to a new generation of workers.

What are the cost implications?

The employer will either need to buy vouchers or codes up front or pay when the employee has redeemed the voucher. Vouchers are available in various denominations, with discounts available when purchased in bulk.

Are there any tax or legal issues?

There are no legal implications. Under HM Revenue and Custom’s Trivial Benefits scheme a non-cash voucher, one that can only be exchanged for goods and services up to the value of £50 is tax-free.

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Who are the main providers?

Blackhawk Network, Edenred, Motivates, Pluxee, Vivup, and Voucher Express are among the main providers.