Getting Paid With Gift Cards or Prepaid Cards: What You Should Know

If you do enough side hustles, research studies, referral programs, or online promotions, you’ll eventually start receiving different types of payouts. Instead of $50 appearing in your checking account, you might get an email with a retail gift card or a virtual prepaid Visa or Mastercard. The dollar value may be the same, but where and how you can spend it can differ. Remember, the number on the card is not what the card is worth.

Gift card vs. prepaid card: What’s the difference?

A retailer gift card only works at one store or brand group; a prepaid Visa or Mastercard works anywhere that card network is accepted. The difference comes down to spending flexibility. A retailer gift card is tied to a particular company or group of brands. If you receive a $50 gift card for a store you already use, that’s straightforward. If it’s for a store you rarely shop at, the reward is less useful.

A prepaid Visa or Mastercard works differently. Rather than being tied to one retailer, it can generally be used at merchants that accept the relevant card network, subject to the card’s terms and restrictions. Some reward platforms avoid making that choice for the recipient altogether, letting them choose between gift cards from national and local brands, virtual Visa cards or Mastercard. This gives the recipient more control over where and how they spend the reward.

Does it matter which gift card you get?

The important question with any bonus or reward is what it’s actually worth to the recipient. Say someone earns $75 for taking part in a research study. One company sends a $75 gift card for a retailer they barely use. Another lets them choose a brand they already shop with or a prepaid card with broader acceptance. The dollar value is identical, but the usefulness isn’t.

Some reward platforms solve this by letting recipients choose their own reward rather than having the business choose one retailer for everyone. Depending on the program, that might mean selecting from a range of national and local brands or choosing a prepaid Visa or Mastercard. The business sets the reward value and manages distribution, while the recipient decides how they want to use it.

Some platforms also let recipients split their reward across multiple gift cards rather than committing the full amount to one retailer. That’s useful for research incentives, customer rewards, rebates, and other programs where recipients are unlikely to share the same preferences.

Where can you use a virtual prepaid card?

Virtual Visa cards and virtual Mastercard cards work anywhere that accepts those networks. They arrive by email, come with their own balance, and an expiry date. They are more convenient than retailer gift cards. While they are subject to the terms and restrictions of the specific card, your options are still much broader. Because the card is digital, you don’t need to receive anything in the mail. Card details are delivered electronically and can then be used for eligible purchases. But it is worth checking the balance and terms, which vary between prepaid card programs, when you receive the card. It is better to do it this way than to find an old email months later and discover conditions you hadn’t noticed.

Is getting paid with a gift card taxable?

Getting paid with a gift card doesn’t automatically make the income tax-free. This is the most important personal-finance point here. The IRS says gig economy income is taxable even when the work is part-time or temporary, isn’t reported on an information return, or is paid in a form other than cash. More broadly, most income is taxable unless the law specifically exempts it. So if you perform $100 worth of side-hustle work and receive $100 of value on a card, don’t assume the payment method changes the underlying tax treatment. That’s different from someone genuinely giving you a personal gift. Tax treatment depends on why you received it, not simply whether it arrived as a gift card. If you’re unsure how a particular payment should be treated, check current IRS guidance or speak with a tax professional.

Why do companies pay people this way?

Paying thousands of people individually by bank transfer is slow and requires personal data that can trigger financial compliance obligations. Virtual Visa or Mastercard cards can be sent in bulk using only an email address. From the recipient’s perspective, getting a digital card can seem like an unusual way to get paid. But from the company’s side, there are plenty of practical reasons to do it. Consider a research company that needs to reward 2,000 study participants, or a business sending rewards to hundreds of customers after a promotion. Manually setting up 2,000 bank transfers isn’t feasible.

What should you check when you receive a prepaid reward?

First, make sure the email or message is legitimate. If you weren’t expecting a payment, don’t click a link simply because the message says you’ve received money. Check the sender and whether the reward relates to something you actually participated in. Scammers get more sophisticated each year. Once you’re sure it’s genuine, check the card type, available balance, expiration date, and any restrictions on where you can spend it. If you’re offered a choice, think about which option fits spending you were already planning to do. Keep the original email until you’ve used the full balance. If the reward represents payment for work, keep a separate record of the amount for your financial and tax records.

Gift card or prepaid card: which should you ask for?

There’s no single right answer. A solid rule of thumb is to take the retailer gift card if it’s somewhere you already spend money, and take the prepaid card if not. If you know you’re going to buy something from that retailer anyway, the gift card can effectively offset spending you would otherwise have made. A prepaid Visa or Mastercard offers broader spending flexibility because it isn’t tied to one retailer, although the card’s terms still apply.

If you’re given a choice, pick the option that fits spending you were going to do anyway. Whether the reward came from a research study, referral, or side hustle, treat it much like other money you receive: understand what you’ve got, check the terms, use the full value, and keep a record if it came from income you’ve earned.

What are alternatives to PayPal and Venmo?

PayPal and Venmo are familiar ways to receive a reward, but they are far from the only options. Research suggests that flexibility matters to recipients: 75% preferred an open prepaid card that could be used across merchants, compared with 8.5% who chose a closed-loop card tied to particular merchants, according to the ⁠Incentive Research Foundation. Some reward platforms take that a step further by letting the recipient choose how to use their reward rather than having the sender decide for them. Giftogram is a rewards and incentives platform that lets a business send one reward that the recipient can redeem across 140,000+ national and local brands or as a prepaid Visa or Mastercard. The business sets the value, while the person receiving it chooses the option that works for them.

It’s not the only option or way you’ll find yourself getting a reward and incentive, so here’s a breakdown of the others:

1. Direct deposit or ACH. Money sent straight to your bank account. It is the most flexible thing you can receive, because it is simply cash. The trade-off is that you have to hand over bank details, which some people are reluctant to do.
2. PayPal. A transfer into your PayPal balance, which you then move to your bank. Fast and familiar. Two things to check: whether the sender marked it as a goods-and-services payment, which can carry a fee deducted from what you receive.
3. Venmo or Cash App. Similar to PayPal and popular for smaller amounts. Both are built around US consumer-to-consumer transfers, so they are a poor fit for anything international, and business use can trigger different treatment than a personal transfer.
4. Virtual prepaid Visa or Mastercard. A card number delivered by email with a set balance, usable at any merchant that accepts the network, subject to that card’s terms. No bank details, no app, and it arrives in minutes rather than days.
5. Retailer gift card. A code for one store or brand group. Excellent if it is somewhere you already shop, close to worthless if it is not. This is the option most worth trading or declining if you are offered a choice.
6. A recipient-choice reward. A single reward that lets you pick what it becomes. Platforms such as Giftogram sit here: a business sends one reward, and you choose from 140,000+ gift card brands or a prepaid Visa or Mastercard. You are not buying or sending anything yourself, the sending company is, but from your side it removes the main problem with gift cards, which is somebody else guessing your preferences.
7. Platform points or account credit. Common on survey and cashback sites, where you accumulate a balance and cash it out later at a threshold. Worth reading carefully: points sometimes expire, minimum cash-out levels can be high, and the conversion rate is not always one to one.

Quick FAQ

Can you get paid in gift cards or prepaid cards?

Yes. Research studies, referral programs, rebates, and some side hustles pay in digital gift cards or a virtual prepaid Visa or Mastercard instead of a bank deposit. Some platforms, including Giftogram, let the payer offer recipients a choice of 140,000+ gift card brands or a prepaid card, so you can pick what works for you.

Where can you use a virtual prepaid card?

A virtual prepaid Visa or Mastercard can generally be used at any merchant that accepts that card network, subject to the specific card’s terms, expiration date, and restrictions. A retailer gift card, by contrast, only works at that retailer or its brand group.

Is a gift card or prepaid card reward taxable?

If the card is payment for work, the payment method doesn’t change the tax treatment. The IRS treats gig and side-hustle income as taxable even when it isn’t reported on a 1099 and even when it’s paid in a form other than cash. A genuine personal gift is treated differently, so if you’re unsure, check current IRS guidance or ask a tax professional.