Self-spend gift cards are the holidays' must have
Credit and debit cards often overshadow prepaid gift cards, but the tables get turned during holidays, particularly as people get gift cards for themselves.
Gift cards utility for traditional shopping is well known. They're popular, thoughtful, and shoppers don't have to race around town to find a store that still has them in stock. And there’s little worry that it won’t be used or will need to be returned to the store.
But the most interesting thing about gift cards is buyers are not just purchasing them for others, but increasingly for themselves.
“The biggest surprise of this year’s prepaid study is the rise of the self-spender,” said Dominic Morea, senior vice president and head of gift solutions at First Data.
In the recent First Data study consumers reported 64 percent of their gift card budget was being set aside for spending on themselves, up from 58 percent in 2017. While consumers in all age groups had reported more than half of their budgets was being reserved for self-spending, the youngest consumers, 18-23, reported almost three-quarters (73 percent) of their budget was being spent on themselves.
How gift cards have become the “it” gift of the holidays has a great deal with how they solve the issue of finding the perfect or ideal gift for someone. “There is a desire to give a gift, but people are stressing over what to give. For a lot of gift givers and receivers, gift cards take the stress out,” noted Morea.
Another major factor contributing to the growth of gift cards is there are more brands than in the past. Instead of just seeing gift cards from the major retailers and national chain stores, consumers are increasingly seeing middle-market brands and, in many cases, local retailers. Also, the rise of the digital gift card has almost reached the same level as physical cards with First Data reporting consumers bought an average of 6.5 physical cards and 6.1 digital gift cards in 2017.
“Gift card programs use to be content on multi-market brands. Now we continue to see gift card technology breaking into midtier merchants and even local markets. It’s the local coffee shop that wants to have an app and a gift card program,” Morea said.
The more relevant the merchant is to the consumer, it’s also more likely they will reload a prepaid gift card for future shopping. In the First Data study it was found that one third of consumers reloaded a prepaid gift card. While older consumers, 54 years of age and older, reloaded 20 percent of their prepaid gift cards, the youngest consumers (18-23) reloaded their gift cards at three times that rate (61 percent).
A consumer may ask for gift card as a present in order to help them buy an unobtainable item. “The gift receiver may be looking to reward themselves with an expensive gift and they take a gift card and apply it to a gift that would have been out of their reach,” said Morea.