The incentives and rewards industry uses many specialized terms.
For people who are new to the sector, these words can be confusing at first.
This glossary explains some of the most common terms used in the gift card, loyalty, and incentives ecosystem.
The explanations use simple language so they are easy to understand.
AML
AML means “Anti-Money Laundering.”
These rules help prevent illegal use of prepaid value, especially when cards can be used widely or converted to cash-like value.
Aggregator
An aggregator connects many gift card brands to many platforms through a single integration.
Instead of connecting to hundreds of retailers individually, companies can connect to one aggregator and gain access to a large catalog of gift cards.
Aggregators usually provide APIs, digital delivery, and international distribution.
API integration
An API integration is a technical connection that allows platforms to issue and deliver gift cards automatically.
APIs make it possible to send rewards instantly and at scale.
Breakage
Breakage refers to gift card value that is never redeemed.
For example, someone may forget about a gift card or leave a small balance unused.
Depending on local regulations, retailers may eventually recognize this unused value as revenue.
Chargeback
A chargeback happens when a payment is reversed by the cardholder’s bank, often due to fraud or disputes.
This is mainly relevant for open-loop products and card-funded purchases.
Closed-loop gift card
A closed-loop gift card can only be used at a specific retailer or brand.
Examples include gift cards for a particular store, restaurant, experience or online service.
Most retail gift cards fall into this category.
Corporate incentives
Corporate incentives are rewards used by companies to motivate employees, partners, or customers.
Examples include gift cards, travel rewards, merchandise, or experiences.
Companies use incentives to improve performance, increase sales, or encourage loyalty.
Digital gift card
A digital gift card is delivered electronically instead of physically.
It is usually sent by email. In some cases the gift card is delivered via SMS or through a mobile app.
Digital gift cards can often be redeemed online or in stores by scanning a barcode or entering a code.
Distribution channel
Distribution refers to the channels used to sell gift card.
Examples include supermarkets, online marketplaces, incentive platforms, and corporate reward programs.
Distribution partners help retailers reach more customers and businesses.
Expiry
Expiry means a gift card or balance becomes invalid after a certain date.
In many countries, expiry rules are regulated and vary by product type.
Float
Float is the time between when money is received and when it is paid out or redeemed.
During this time, the holder of the funds may benefit from improved cash flow, and sometimes interest.
Fraud controls
Fraud controls are checks and rules that reduce abuse, such as stolen cards, account takeovers, or suspicious redemption patterns.
They can include velocity limits, risk scoring, and manual review.
Fulfillment
Fulfillment is the process of delivering the reward to the recipient.
For gift cards, this usually means generating a code and delivering it by email, SMS, or inside an app.
Gift card issuer
A gift card issuer operates the technology behind a gift card program.
Issuers manage card activation, balance systems, redemption processes, and security.
Retailers often work with issuers to manage their gift card programs.
Incentive program
An incentive program rewards people for completing certain actions.
Examples include achieving sales targets, completing training, or participating in promotions.
These programs often use gift cards or points as rewards.
KYC
KYC means “Know Your Customer.”
It is a compliance process used to verify the identity of customers, especially for open-loop or higher-risk payout programs.
Loyalty program
A loyalty program rewards customers for repeated purchases or engagement with a brand.
Customers usually earn points that can later be redeemed for rewards such as discounts, products, or gift cards.
Airline miles programs are a well-known example.
Open-loop gift card
An open-loop gift card runs on a payment network such as Visa or Mastercard.
Unlike closed-loop cards, it can be used at many different merchants that accept the payment network.
These cards work similarly to prepaid debit cards.
Processor
A processor is the system that processes gift card transactions and keeps the balance updated.
It connects the retailer’s gift card program to sales channels and redemption points, and it helps authorize, record, and report transactions.
Restricted open-loop gift card
A restricted open-loop gift card runs on a payment network but can only be used at selected merchants or within a specific program.
This combines the flexibility of open-loop cards with restrictions defined by the program sponsor.
Overspend
Overspend happens when customers spend more than the value of their gift card.
For example, someone may receive a $50 gift card but purchase items worth $70.
Retailers benefit from this additional spending.
Reward catalog
A reward catalog is a collection of rewards that users can choose from in a program.
Catalogs often include gift cards, merchandise, travel options, experiences, and digital rewards.
Participants can select the reward they prefer.
Reward marketplace
A reward marketplace is a platform where users can choose from many reward options.
These marketplaces are commonly used in incentive programs and loyalty platforms.
They allow users to redeem points or rewards for gift cards, products, or experiences.
Redemption
Redemption happens when a user spends or uses a gift card or reward.
For example, a customer may redeem a gift card at a retailer’s website or store.
Redemption data is important for measuring program performance.
White-label
White-label means a product is offered under another company’s brand.
In rewards, a platform may offer a white-label reward store so the client looks like the operator.