. Why Gift Card Programs Are Growing in 2019 | Northstar Meetings Group

Why Gift Card Programs Are Growing in 2019

Insights from First Data's recent research into consumer habits

We've all been there: You receive a gift card, you take the card shopping and the item you want is ever-so-slightly out of your price range. But your gift card makes a $65 purchase only cost $15, so why not splurge a bit extra for something you've really been wanting? The stress-free convenience of shopping with a gift card is one of several reasons shoppers, especially those in the Gen Z and Millennial generations, are embracing the value of gift cards -- often referred to as branded currency -- at a record rate. 

First Data's 2018 U.S. Prepaid Consumer Insights Study found the future of branded currency looks bright across industries. Last year marked the fifth consecutive year that consumer spend on gift cards increased. Whether gift cards are used to fuel a strong employee rewards program or incentivize customer loyalty, corporations and retailers are increasingly turning to modern gift card tools to encourage strong performance and continued shopping

Treat Friends and Treat Yourself


Gift cards are no longer just given out during the holiday season. In fact, First Data's study found that consumers plan to spend 55 percent of their gifting budget on gift cards, and they are doing so throughout the course of the year. Recognizing loved ones year-round with spur-of-the-moment gifts is a fun way to show appreciation with little hassle. 

What's more, gift cards aren't only used as presents for others. The 2018 study found 64 percent of shoppers bought a gift card for themselves in 2018, up from 58 percent in 2017. This trend is especially common among shoppers ages 18-23 and 24-37 (with 73 percent and 71 percent of shoppers in these age groups picking up cards for themselves, respectively). What's the incentive for this trend of self-indulging? With more and more retailers offering loyalty and rewards programs through their reloadable gift card programs, consumers are using gift cards to cash in on rebates and discounts at the places they most frequently shop. 

Shopper Loyalty Programs Offer Long-lasting Return

Establishing loyalty programs through gift cards allows brands to easily offer customer rewards, merchandise credit, social media contest prizes and charity giveaways. Each tactic works to engage shoppers and motivate continued spending beyond the original gift card amount. The strategy seems to be working for many brands already: 33 percent of consumers reloaded a gift card in 2018, including 61 percent among shoppers ages 18-23. 

Some gift card programs are also enabling "flash stores," campaign-based digital engagement tools that allow brands to deliver exciting, short-term, time-sensitive sales incentives and special offers to generate immediate sales. Brands can customize flash stores to support their specific needs, such as moving overstock quickly, generating sales during off-peak hours or targeting a specific type of customer.

Digital Drives Sales

Shoppers are also increasingly turning to the convenience of digital gift card options. In 2018, 50 percent of shoppers between the ages of 24 and 37 stated they were interested in buying gift cards through a banking website or mobile app, and 52 percent of all consumers stated they would prefer a single app that manages all their gift cards. 

According to the data, 47 percent of consumers ages 18-23 prefer plastic gift cards, but they're also more open to e-gift cards than any other generation. Currently consumers prefer physical cards because they are more personal but will often use eGift cards because they can be sent instantly, and digital purchasing is more convenient. Embracing mobile gift card solutions, whether you're a retailer or corporation, will afford shoppers convenient digital features such as auto-reloading, real-time messaging and other customer engagement tools. 

The gift card economy continues to grow, led by tech-savvy generations who prioritize an expedient shopping experience. Whether it be strong employee rewards opportunities or customer service innovations, the industry is increasingly turning to modern branded currency tools to incentivize shopping.

Dom Morea is senior vice president and head of gift solutions at First Data, where he is responsible for leading the transformation and growth of the industry's leading provider of branded stored value solutions. Dom is a veteran of the payments industry where he has focused on the creation and growth of enterprise-level, strategic relationships with many of the world's largest retail, banking and technology brands. He has led the development of new partnerships and innovative commerce solutions with global companies ranging from iconic brands to start-ups, such as: Apple, Bank of America, Citibank, ExxonMobil, Foursquare, Google, Gyft, McDonald's, Microsoft, Tim Horton's, Unicredit Bank and Wells Fargo.