Are gift cards the right method for your shop local initiative?

Local governments and economic development organizations across the country are investing more in shop local campaigns to support small businesses. But as these programs grow, so does the question of how best to incentivize participation. 

One of the common tools used is gift cards. At first glance, gift cards seem like a straightforward way to encourage local spending. But beneath the surface, they come with a host of challenges that can frustrate both businesses and shoppers. If your program relies on gift cards or digital punch cards/passports, it might be time to ask: Is there a better way?

Let’s explore the limitations of traditional gift cards, and see why communities like El Paso, TX and Arlington, VA have already adopted Open Rewards, the brand new program that makes your shop local initiative seamless, flexible and dynamic, and offers a simple and rewarding experience for both local businesses and shoppers.

The challenge with gift cards

1. Compatibility issues

Any local businesses that are cash-only and can’t accept card payments are immediately excluded. This means many local establishments such as barber shops and food trucks are automatically left out of your shop local program. For the rest of the small businesses that do utilize a point-of-sale (POS) system, many don’t support card-not-present (CNP) transactions, which is how virtual gift cards are processed. This leaves many local businesses unable to accept the cards at all, undermining your program's inclusivity and reach.

2. Cumbersome to use

Assuming you found a business that accepts CNP transactions, you now have to ask the staff to manually key in the card’s 16 digits, expiration, CVC, and zip code. That is a lot of numbers to type while you are standing at the check-out counter, leading to potentially stressful and poor experiences for both the staff and the shopper. 

3. Remaining balances = headaches

Gift cards can only be charged up to their exact remaining balance. That means customers need to know the precise amount left on the card, and tell the staff to charge only up to that amount and put the rest on a different payment method. If there’s any mistake, the payment will fail, and the staff will have to manually enter everything all over again—causing delays and confusion.

4. Limited participation

Businesses have to opt in to become part of the gift card’s network. This puts the burden on you, the program administrators, to pound the pavement and enroll businesses. Furthermore, for all the above reasons, many small businesses simply don’t join the program to avoid the operational burden. This limits the options where shoppers can use their gift card and lowers the program’s perceived value.

A reinvented solution for your shop local initiative: Open Rewards

Open Rewards by Bludot was developed with these challenges in mind. Instead of a rigid, POS-dependent gift card system, Open Rewards turns the entire local economy into a flexible, rewards-based experience.

Here are the highlights:

• Businesses don’t have to sign up or change a thing—no POS reconfiguration, no CNP transactions, and no staff training

• No more pounding the pavement to enroll businesses. Every business can be instantly enrolled by you as the program administrator.

• Cash-only businesses are supported too, making the program truly inclusive

• Shoppers earn rewards every time they shop at an eligible business in your community

• Rewards are stored in the user’s Open Rewards wallet and can be redeemed at any eligible business, not just the one where the reward was earned

  
  
  
  

🎉 One App. Every Business. Cash Back Rewards.

Vouchers as the gift card replacement

To go one step further, Open Rewards also includes a voucher system—a powerful alternative to upgrade the gift card model. With vouchers, local shoppers and employers still have a way to buy a shop-local voucher, and communities can distribute specific dollar amounts to residents or target groups (e.g., program participants, holiday shoppers, tourists or even car buyers).

Here’s why Open Rewards vouchers win:

✅ No POS requirements

✅ No fees or expiration

✅ Can be redeemed at any business, even cash-only businesses

✅ No need to track balances or enter exact amounts

✅ No need to manually key in card numbers

This system was built to provide a seamless way to drive spending across your entire local business ecosystem—without technical barriers or user friction.

The bottom line

Gift cards may have once been the only option—but today, economic development organizations have better tools at their disposal. If you want to join the 200+ communities across the country already utilizing Bludot to build a modern, inclusive, low-lift shop local initiative that supports your entire business community, Open Rewards is ready. Schedule some time to see what Open Rewards would look like in your community.