Closed-Loop Prepaid Card Redemptions Up in 1Q 2011

by Mercator Advisory Group 0

First Data Corp. released its overview of its SpendTrend Data and found that while there was strong activity, post-holiday gift card redemption was down when compared with last year.

In January, year-over-year activations surged as merchants enticed consumers with gift card incentives. Post-holiday redemption rates slowed, likely due to a succession of winter storms across the country. Redemptions rebounded with double-digit growth in February as consumers took advantage of milder weather to seek out seasonal bargains. March overall dollar volume growth of activations, redemptions and reloads posted strong double-digit increases.

Although First Data attributes much of the redemption delays to the weather, one wonders whether the economy may have also played a role. Redemptions increased during February and March, and it is possible that retailers began offering better deals to make up for sluggish sales. It is also possible that consumers held out for better deals, especially since their cards now have longer expiration dates. Additionally, consumers have been known to hold onto gift cards and use them for staples such as food and cleaning supplies when they have cards from stores that sell those items.

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