Why Gift Cards Will Never Be Entirely Digital or Entirely Dominant
July 23, 2012
Ben Jackson
Mercator Advisory Group
Technophiles like to predict that plastic will disappear and that all gift cards will be purchased, sent, received, and redeemed via computers and mobile phones. Surveys of gift givers and recipients show that more and more people list gift cards as their first choice of gifts to give and receive. So it would seem that the end of these trends is that all of our future gifts will come via e-mail or text message. Yet this is an extreme point that will never be reached.
In What Money Can’t Buy: the Moral Limits of Markets, author Michael Sandel briefly talks about gift cards in a broader discussion of how gift giving is not viewed as a rational practice by economists, unless that gift is cash. Any other kind of gift does not “maximize the welfare your gift provides…” He goes to write that “gift cards represent a halfway house between choosing a specific gift and giving cash.”
As Sandel points out, gifts are about more than just “maximizing welfare” of the recipient. They carry additional value that is not easily quantified. However, he may be a little harsh when he says the gift cards represent the commoditization of gifts and affection. For example, a gift card to Subway restaurants probably has more value to it than buying ten sandwiches to sit around in the freezer.
That is why physical gift cards – whether they are made of plastic or some other material – are likely here to stay. That halfway point between cash and a gift gives people the ability to send gifts at long distances, contribute to a gift they otherwise couldn’t afford, and give a gift like sandwiches that might not fit so well into wrapped box. The other advantage of cards is that they do this with a physical token that helps bridge the gap between cash and physical cards. This is why plastic will never go away.
The desire for a physical gift, a token that will convey something more than just “Happy Birthday” or “Congratulations on Your Graduation” will keep the other extreme from happening. In other words, even with all the advantages of gift cards, there are still people who want to give an actual sweater or other item because they feel, as Sandel does, that gift cards are just one step away from giving cash – and that’s just tacky.