Digital vs. Physical Rewards: What Gets Redeemed Where, and Why

If you asked a room full of rewards professionals whether digital or physical rewards perform better, you'd get a dozen different answers. And they'd all be right, depending on where in the world you're asking.

The truth is, there's no universal winner. What dominates in North America barely registers in Latin America. What's surging in APAC is holding steady in Europe. The best-performing programs don't pick a side; they understand how preferences vary by region and design their catalogs accordingly.

Here's what the data actually shows:

The Global Picture: A Shifting Balance

Across CarltonOne's platform, spanning over $1 billion in redemptions across 190+ countries, four reward categories account for 95% of all redemption value: Merchandise, Travel, Prepaid and Gift Cards.

Prepaid (a digital reward) still leads at 39% of total volume, but its growth has flatlined. Meanwhile, Merchandise (physical) is surging, now representing 30% of redemptions with year-over-year growth exceeding 30%. Virtual Gift Cards are growing steadily, and e-Transfers (direct program-to-bank-account payouts) are up more than 100%, though still a small share of overall volume.

The takeaway? Digital rewards remain popular for their convenience, but physical rewards are gaining ground fast. The categories growing fastest aren't just useful, they're wanted.

North America: Digital Leads, But Premium Is Rising

In the US and Canada, prepaid cards lead with 34% of regional volume, followed by digital gift cards, which grew 18% year-over-year.

But look closer and a shift emerges. Premium electronics (think high-end headphones, smartwatches, and iconic brand products) surged 185% year-over-year. At the same time, generic electronics declined by nearly 10%.

North American earners still value speed and flexibility, but when given meaningful choice, they're increasingly reaching for aspirational merchandise. Convenience gets them in the door. Premium keeps them engaged.

Europe: Experiences and Values Matter Most

European reward volume is growing at more than 50% year-over-year, one of the fastest-expanding regions in our network.

Digital gift cards lead here too, accounting for 42% of regional volume. But the real story is what's growing fastest: Travel and Experiences. European earners are more likely to save their points for bigger-ticket, memorable rewards rather than redeeming frequently for smaller items.

There's also a values dimension. European redeemers are twice as likely to choose eco-friendly reward options compared to the global average. Sustainability isn't a nice-to-have, but more of a decision factor. Programs that want to win in Europe need catalogs that reflect not just what people want, but what they stand for.

Latin America: Tangible-First, But Digital Is Coming

Latin America is growing at more than 20% year-over-year. Unlike other regions racing toward digital-first, LATAM still favors what you can hold. Physical merchandise rewards are chosen the most.

But the landscape is shifting. Digital gift cards have shown 198% year-over-year growth as mobile wallet adoption accelerates across the region. Prepaid cards remain steady.

LATAM may be tangible-first today, but digital is coming on strong. Programs expanding into the region should lead with merchandise but build in digital options for the transition ahead.

APAC: Mobile-First and Moving Fast

Asia-Pacific matches Europe as one of our fastest-growing regions, with growth exceeding 50% year-over-year.

This is a mobile-first market. Digital gift cards grew nearly 100% year-over-year, and premium phones surged an astonishing 5,000%+. Earners here prioritize instant digital delivery, and anything that introduces friction tends to underperform.

India stands out as one of the fastest-growing single markets globally, with growth approaching 90%. APAC is where digital rewards are winning decisively, and where expectations for speed and convenience are highest.

Middle East & Africa: Corporate Gifting Sets the Pace

The smallest regional market, Middle East and Africa is driven primarily by corporate gifting and formal recognition programs. Gift Cards lead, followed by Merchandise and Prepaid Debit.

Growth here is steady and structured; often the first step toward broader rewards adoption. South Africa has emerged as a key growth market and could anchor regional expansion in the years ahead.

What This Means for Your Program

There's no single answer to "digital or physical?" The right mix depends on where your program members are, what they value, and how they prefer to engage.

A few principles to guide your strategy:

Know your regional defaults. Lead with digital in APAC and North America. Lead with merchandise in LATAM. Balance both in Europe with an experiential tilt.

Don't ignore the growth signals. Merchandise is surging globally. Premium is beating generic. Experiences are gaining share. Programs that stay static will fall behind.

Design for values, not just convenience. Especially in Europe, sustainability and purpose-driven options are becoming decision factors, not afterthoughts.

Build flexibility into your catalog. Regional preferences shift over time. The programs that perform best are the ones that can adapt.

Go Deeper

This is just a snapshot. For the full breakdown of regional trends, category performance, and what's driving redemption behavior across 190+ countries, download our 2026 Rewards Benchmark Report.

CarltonOne powers the world's leading engagement and loyalty programs with a single global rewards supply chain in over 190 countries with one API, endless choice.