Spurred by Heavier Marketing, Gift Card Loads Grew 9% in 2014, New Report Says

With a little more marketing oomph behind it, the gift card market rebounded in 2014 after a down year in 2013, according to a report released Wednesday by Mercator Advisory Group. Virtual gift cards, a small but key segment of the market, held their own and may soon benefit from the emergence of more digital wallets, a Mercator analyst says.

Overall, gift card load volume grew 9% last year despite what retailers reported as a slower holiday season. “The big thing was the growth vs. 2013,” Ben Jackson, director of the prepaid advisory service at Maynard, Mass.-based Mercator, tells Digital Transactions News. “There was almost double-digit growth. Issuers were able to turn things around.”

Driving that growth was stronger marketing, including efforts to promote gift cards in connection with more holidays and special occasions, Jackson says. While birthdays and Christmas have always been obvious occasions for the cards, now merchants are pushing them for graduations, Mothers’ and Fathers’ days, and other lesser holidays throughout the year.

“There was more of a marketing effort, more of a push to say gift cards are worthwhile around more holidays,” Jackson says.

Another key driver last year was the market for so-called consumer-incentive cards. These are prepaid cards handed out to consumers as a reward for some desired behavior in a store or online, such as trying out a product. “There was some good growth in consumer incentives that helped the overall market,” Jackson notes.

Perhaps the most interesting segment of the market is that for so-called virtual cards, or cards that exist digitally on a mobile device rather than as plastic. Issuers like Starbucks Corp. and Dunkin Donuts have been especially successful with such cards in recent years.

Jackson estimates virtual cards accounted for 3% to 4% of all gift card loads last year. That’s a small chunk of the market but one that could grow dramatically in coming years with the advent of mobile wallets, Jackson says. “We’re still not seeing digital take over the market, but it’s very valuable for some retailers and popular with digital natives,” he says.

Wallets like Apple Pay and Android Pay have already launched or are expected to soon, and they are expected to be followed this summer or fall by products from Samsung and MCX, a consortium of major retailers. If some or all of these products integrate virtual gift cards, that could boost the market by providing a ready-made platform for more retailers, Jackson says.

Indeed, the wallets could prove to be the best of all worlds for virtual-card issuers, Jackson says. That’s because they are usable across multiple merchants but any single gift card loaded in them can only be used at the issuer’s stores, eliminating the possibility of so-called customer leakage.

On top of that, the platform comes built and tested, which means merchants don’t have to assume the development costs of building their own. “Now I’ve got MCX to do it for me,” says Jackson.


Source: Digital Transactions

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TAGS:   card manufacturing, holidays, trends


RGCA Forecasts Big Gift Card Sales This Summer

More than 70 percent of shoppers will be giving gift cards this spring and summer during the assortment of gift-giving holidays that are approaching, including graduations, Father's Day, and weddings, according to research from the Retail Gift Card Association. The RGCA confirmed that the gifts remain popular with recipients as well, with 95 percent of consumers hoping to receive gift cards this spring and summer season.

"Large-scale retail trends, like movement towards omnichannel and increasing awareness of digital offerings, continue to be reflected in consumers' use of gift cards," Timm Walsh, RGCA chairman of the board, said in a statement. "And our biannual research has confirmed again that shoppers still consider gift cards to be safe, preferred gift choices. This spring and summer season should bring increased sales of this favored gift product."

The RGCA surveyed more than 1,000 U.S. consumers on their use of gift cards and habits for giving and receiving the cards, the release stated.

The RGCA study also found:

  • Gift cards' popularity continues to grow: Just last year, two thirds of shoppers planned to buy gift cards during the spring and summer gift season, and that number has grown to more than 70 percent this year.
  • Omnichannel flexibility is key: In tandem with the growing consumer demand for omnichannel connectivity across all facets of retail, 80 percent of gift givers want their recipients to have the option of redeeming gift cards online or in person, and 87 percent of recipients want to be able to redeem via either channel as they choose.
  • Awareness of e-gift cards is growing: As more shoppers receive e-gift cards, the awareness of this type of gift is growing. 27 percent of gift recipients have now received e-gift cards, a 5 percent increase from last holiday season.
  • Physical gift cards still reign supreme: Most shoppers (56 percent) plan to give physical gift cards exclusively, and the most common denomination is between $25 and $50. Reasons why physical gift cards remain preferred include wanting to give a physical or packaged gift, when the recipient doesn't have a smart phone and because the gift giver simply prefers physical gift cards to e-gifts.
  • All gift cards are not created equal: The most popular types of gift cards this spring and summer for givers and recipients alike include those to restaurants (47 percent), department stores (30 percent) and online marketplaces such as Amazon (29 percent).

Source: Retail Customer Experience


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TAGS:   card services, holidays, trends


2014 Holiday Gift Card Trends

For the eighth year in a row, gift cards were at the top of everyone's wish list for the holidays. Providing unlimited possiblities, gift cards are the preferred way to give the gift of choice. As the crowds thin and summer nears - 'tis time to review the gift card trends at retail during the 2014 holiday shopping season...and look ahead to 2015!

TAGS:   card fulfillment, card manufacturing, card services, holidays, trends