When you think of gift cards, do you still only envision the credit card-sized plastic payments tools given as presents? Like most other tools in the payments industry, gift cards have evolved far beyond their original forms.
Consider the plastic factor. Sure, physical gift cards with company logos are prevalent at drug stores, convenience stores, and supermarkets across the country, but consumer demand for omnichannel redemption of these cards – across in-store, online and mobile devices – is ramping up.
We found in our 2015 shopper research that 80% of consumers want the gift cards they buy as presents to be easily redeemable online or in person based on the specific recipient’s preference. Additionally, 98% of gift card recipients redeem them via a variety of channels, including in-store, online, via mobile or using a combination of these options.
Whereas just a few years ago e-gifts were relatively unheard of, roughly half of consumers have now received these online and mobile gifts. And we expect that figure to continue growing as smartphone adoption expands and online shopping becomes even more engrained. Now gift cards are even being integrated into mobile wallet applications, making them easier to keep at the ready and redeem.
However, it’s important to point out that as gift cards have become more omnichannel, the value in physical gift cards has not diminished. Even though usage of e-gifts has grown, plastic cards are still the most favored. Like many payments segments, the gift card industry simply requires a more robust sales and redemption model than in the past to be successful and to keep up with consumer preferences and demands.
And there is good reason for the industry to keep an eye on strategically evolving gift card programs: the demand for gift cards remains incredibly high. Our research found that 83% percent of the population plans to give gift cards this year, for reasons including: they give recipients the flexibility to buy what they want, they are convenient to purchase, and they are what recipients are asking for the most. People still love receiving gift cards, too. 98% of gift card recipients redeem them, and the top reason people like to receive gift cards is so they can purchase what they want.
Like most payments tools, the consumer usage patterns of gift cards are shifting to increasingly include online and mobile. While this omnichannel approach to shopping and purchasing is a natural evolution for consumers, it will be up to the industry to stay ahead of the curve, offering the capabilities and convenience that consumers will expect today and tomorrow. And with the demand for gift cards so high, this is one payments category that should remain at the forefront of omnichannel expansion. Gift cards aren’t just about plastic anymore.
Timm Walsh is the Chair of the Board of Directors for the Retail Gift Card Association.