The Hidden Operational Costs of Managing Employee Rewards Internally

Most organizations assume gift card rewards are operationally simple: pick brands, load value, send rewards, and move on. That assumption rarely survives at scale.

The IRF’s 2026 research found gift cards are the most widely used reward format across North America and Europe, while the 2025 IMA global study found organizations are moving toward more digital, customized, and localized incentive experiences.

Together, these trends are turning reward fulfillment from a small administrative task into a cross-functional operating model involving HR, operations, procurement, finance, security, and technology.

What many organizations underestimate is that every reward program has two distinct layers:

1. The experience layer is what employees and recipients see: timely recognition, easy redemption, and meaningful brand choice.
2. The operations layer is what the organization must manage behind the scenes: supplier onboarding, catalog updates, purchasing approvals, invoice reconciliation, delivery tracking, exception handling, fraud review, international requirements, and audit-ready reporting.

Once gift cards or other forms of stored value enter an organization's workflow, reward fulfillment becomes an operational system requiring consistent processes, financial controls, security, and scalable infrastructure. While each responsibility may seem manageable on its own, together they determine whether a program scales efficiently or becomes an administrative burden.

Vendor sourcing and catalog management are never one-and-done

Many organizations launch with a handful of popular merchants and assume the catalog is complete. It rarely is.

Vendor sourcing is one of the first places where the operations layer begins to grow. What starts as a few merchant relationships can quickly become an ongoing process of catalog maintenance, supplier management, and recipient support.

Employee preferences evolve, retailers enter and leave markets, and regional demand varies. The IRF’s 2026 Industry Outlook reinforces that building a relevant rewards catalog is an ongoing operational responsibility rather than a one-time purchasing decision.

The 2025 IMA awards offer a useful proof point. Its Excellence in Gift Cards winner described a Zurich LiveWell program that serves employees in more than 10 countries, processing over 20,000 reward orders while improving engagement through locally relevant reward options rather than a single global catalog.

The lesson extends beyond one program: as organizations grow, maintaining relevant reward choices becomes more complex.

Internal teams may need to:

• Maintain merchant relationships
• Update catalogs as preferences change
• Manage regional reward offerings
• Coordinate supplier support

Instead of continually sourcing and managing additional vendors, organizations can centralize catalog access through a reward fulfillment platform.

The Engage2Reward™ Gift Card Ordering Platform provides access to more than 400 gift card brands through its ordering portal and gift card API. The Engage2Reward™ Choice Card can further reduce catalog-management pressure by allowing recipients to choose the reward that is most meaningful to them.

This shifts the organization’s role from predicting every recipient preference to managing a more flexible, centralized reward experience.

Procurement and accounting turn rewards into a finance process

As the operations layer expands, finance inherits a growing share of the work. Every gift card purchase creates accounting activity long before a reward reaches its recipient. For example, APQC estimates a median cost of $6 to process a single accounts-payable invoice, based on a cross-industry sample of thousands of organizations.

The cost goes beyond processing the original invoice. Reward programs may also require:

• Purchase approvals
• Invoice reconciliation
• Cost-center allocation
• Audit documentation
• Department chargebacks

APQC identifies measures such as first-time error-free disbursement and duplicate-payment prevention as important accounts-payable metrics because even small errors create additional work and cost.

The same principle applies to reward fulfillment. More suppliers and manual steps generally mean more opportunities for errors, delays, and administrative follow-up.

Compliance adds another consideration. Depending on the reward type, recipient, and country, programs may involve employee tax reporting, VAT treatment, or other legal and regulatory requirements. Because tax and voucher rules vary by jurisdiction, organizations should obtain appropriate tax and legal guidance as their programs expand.

A centralized reward fulfillment platform does not remove every tax or compliance responsibility. It can, however, provide cleaner records, consolidated reporting, more consistent approval workflows, and greater visibility into how rewards are purchased and distributed.

Fulfillment operations create an exception-handling business

Fulfillment is where the operations layer becomes most visible. Sending one gift card is simple. Sending thousands through multiple delivery methods is not.

Organizations quickly find themselves supporting email delivery, SMS, physical cards, bulk distributions, scheduled campaigns, and individual recognition awards. Each delivery method introduces its own exceptions.

Common examples include:

• Email bounces
• Invalid recipient data
• Lost shipments
• Replacement requests
• Delivery inquiries

These exceptions may appear minor when handled individually. At scale, they create an ongoing support function.

The more successful a reward program becomes, the more delivery events the organization must track and the more opportunities there are for something to require manual intervention.

Without a centralized system, teams often rely on spreadsheets, email chains, merchant portals, and manually maintained order histories. That makes it harder to identify what was sent, what failed, what was replaced, and what still requires action.

The Engage2Reward Platform centralizes digital and physical fulfillment while providing order tracking, approval workflows, branding, and reporting through one system. Instead of managing routine distributions and exceptions across disconnected tools, teams can automate repeatable processes while maintaining visibility into each order.

Fraud prevention is now part of rewards management

Security also sits within the operations layer, and fraud can quickly make an internally managed reward program expensive.

Fiserv’s Q3 2025 Gift Card Gauge found that 84% of surveyed consumers were concerned about gift card scams, with card draining a leading concern. The Federal Trade Commission also continues to warn about gift card tampering and fraudulent redemption schemes.

While consumer fraud research does not directly measure corporate reward losses, it shows the broader risk around stored value. Internally managed programs face similar operational threats.

These may include:

• Unusual ordering patterns
• Duplicate reward requests
• Unauthorized purchases
• Compromised user accounts
• Account takeovers
• Improper access to card numbers or codes
• Abnormal bulk-order activity
• Attempts to bypass approval processes

Fraud prevention must be built into the ordering workflow rather than handled after an incident. Manual review may work for small programs but becomes increasingly difficult as order volume, users, and delivery methods expand.

Engage2Reward™ AiShield adds AI-assisted monitoring to the ordering process, helping identify suspicious activity earlier while supporting stronger approval controls and program oversight.

The goal is to build protection into the same infrastructure used to order, approve, and deliver rewards.

Global programs multiply operational demands

Global expansion magnifies every part of the operations layer. Organizations must account for:

• Locally relevant merchants
• Different currencies
• Language preferences
• Country-specific availability
• Tax requirements
• Regional regulations
• Delivery restrictions
• Multiple supplier relationships

Managing these differences internally often requires separate country-level fulfillment processes, adding contracts, invoices, reporting requirements, support paths, and risk of inconsistent experiences.

Centralized reward infrastructure offers a more scalable alternative. The Engage2Reward Platform can deliver regionally relevant rewards across more than 60 countries through one system, helping organizations expand internationally without sourcing and managing a new supplier in every market.

For global employers and software platforms, centralized infrastructure improves operational control and recipient experience by giving teams one place to manage rewards while offering recipients more location-appropriate options.

Better reporting becomes a strategic advantage

Reporting is what connects every part of the operations layer. As reward programs mature, leadership begins asking more detailed questions:

• How much have we spent?
• Which departments or programs are issuing rewards?
• Which orders were delivered successfully?
• Which orders failed?
• What still requires approval?
• Are there unusual purchasing patterns?
• Which countries or employee groups are driving volume?
• Do our records support financial and compliance reviews?

These questions are hard to answer when reward activity is spread across invoices, emails, spreadsheets, and merchant portals.

They become even more important as regulations and governance expectations evolve. IRF’s 2026 outlook found that 70% of reward programs struggle to stay informed about regulations that may affect them.

Reporting is an operational necessity, not just an administrative convenience.

The Engage2Reward Platform combines order management, delivery visibility, approval workflows, reporting, and analytics in one view. That matters because true scalability means processing thousands more orders without adding proportional work across HR, procurement, finance, legal, security, and support.

The build-versus-buy decision

The strategic question is not simply: Can we manage reward fulfillment ourselves?

It is: Should we?

Building internally may work when rewards are a true strategic differentiator and the organization is ready to own merchant relationships, catalog operations, finance workflows, security controls, delivery support, and global expansion.

For most organizations, rewards are not the core product; they support engagement, loyalty, health outcomes, sales performance, research participation, or software experiences.

That points to infrastructure over internal patchwork.

For HR, procurement, finance, and software teams, the decision is whether rewards are a strategic product capability or an operational function best handled by specialized infrastructure.

Focus on the reward, not the operational burden

Recipients only see the reward experience, but behind it are supplier management, fulfillment, finance, fraud prevention, compliance, and reporting. Those operational responsibilities determine whether a program scales successfully. The Engage2Reward Platform is designed to centralize these functions—from catalog management and fulfillment to reporting, fraud protection, APIs, and global delivery—so organizations can focus on employee engagement, customer experience, and business outcomes rather than administrative overhead.

If your organization is evaluating whether to build, expand, or streamline a reward program, our team can help you determine the approach that best fits your business, technical, and operational requirements.

Take the complexity out of reward fulfillment. Give our team a call today to explore how the Engage2Reward Platform and Gift Card API can make your program fast, flexible, and easy to manage.