. Self-Purchasing of Gift Cards on the Rise | Northstar Meetings Group

Self-Purchasing of Gift Cards on the Rise

First Data report also finds growth in physical gift cards

First Data Gift Card

Gift card sales were strong in 2016, and part of that may be because more consumers are buying gift cards for themselves. That was one of the findings from a new trend report by credit card processing service First Data, which looked at recent trends in gift card purchases and use.

The report, titled "The Future of Gift Cards: 2016 Prepaid Consumer Insights Study," drew on the responses of 3,650 consumers and was conducted last October. It found six overall trends in how individuals are purchasing gift cards, ranging from the persistence of physical gift cards to the rise of mobile apps. 

On the former point, the report notes that 72 percent of respondents had purchased or received a physical gift card in the past year, while just 51 percent said the same of digital gift cards. And this use of physical gift cards appears to be growing: Respondents reported that they had purchased an average of 5.9 physical gift cards in the past 12 months -- a steady increase from 2014 (when they reported an average of 4.7 physical cards purchased) and 2015 (5.5 cards). 

Another trend spotlighted by First Data was the three major consumer groups it identified as driving gift card adoption. The first, "The Socializers," aged 18-34, look for value and convenience, with 21 percent buying physical gift cards and 34 percent purchasing e-gift cards. Those aged 35-54, "The MTV Generation," were most likely to purchase cards for self-use, with 40 percent buying physical gift cards and 44 percent purchasing digital. "The Maturists," ages 55 and older, spent the most on gift cards, on average -- $75 on physical gift cards over the year, and $84 on e-gift cards.

Speaking of generational differences, the report found that younger consumers are more open to receiving notifications about their gift cards. When asked, how interested they would be in receiving emails or text messages about balances or special offers from a merchant whose gift card they have stored on their phone or app, 85 percent of those ages 18-34 expressed interest. This was compared to 80 percent of those in the 35-54 age range and 67 percent of those aged 55 and older.

One growing area of gift-card spending is self-purchase, with 53 percent of respondents stating that digital gift card purchases they made in the past 12 months were for self-purchase -- a 13 percent growth over self-purchase rates in 2014 (physical gift cards saw a 9 percent growth in self-purchase).  

"Driven by loyalty points, rewards, and discounts, more consumers are purchasing gift cards for their own use than in years past," write the report's authors.

A PDF of the full report can be downloaded here.