Overview
Gift cards are a big business, exceeding $95 billion in loads in the United States, with solid expectations for continued growth well into the future. Whether the gift card business will survive isn’t really a question; the question seems to be what form factor will prevail. Will it be a physical plastic card, a contactless physical plastic card, digital cards, or those used via a mobile device or form factor? The reality will likely end up being a combination of all the above, at least for the foreseeable future.
Mercator Advisory Group’s new research report titled Digital Gift Cards: U.S. Market, 2019 provides a look into the U.S. digital gift card market including market size, growth forecast, fraud, breakage, and best practices. Additionally, the report looks at the federal and state regulatory environment for prepaid gift cards and identifies risks that can affect program revenue.
"Digital gift cards will continue to grow and eventually surpass physical gift cards. However, in the meantime, retailers should be using an omnichannel approach to growing their gift card programs. That means offering gift cards through store locations, offering online ordering with physical card delivery, online/app/mobile app ordering with a digital delivery. Consider offering or adding a loyalty program to your gift card program to encourage repeat purchases,” stated C. Sue Brown, Director of Mercator Advisory Group's Prepaid Advisory Service, and author of the report.
This research report has 17 pages and 9 exhibits.
Companies mentioned in the report include: Audit Analytics, CGI Research, Chargeback.com, Giftcards.com, Kount, and Riskified.
One of the exhibits included in this report:
Highlights of the report include:
- Digital gift cards are purchased most frequently by consumers with an annual income of $75,000 or more.
- Microgift cards are gift cards provided digitally via a token for small amounts usually under $20, with $5–10 being the most common amount.
- Gift card fraud is between 1% and 4% of revenue. Fraud is prevalent for both physical and digital gift cards but is higher for digital gift cards.
- Digital gift card fraud is a $950 million annual loss to the industry annually.
Make informed decisions in a digital financial world