Tell us a little about the current state of the closed loop gift card industry.
Gift cards are one of the most popular gift choices for consumers, and have been for the last several years. Shoppers enjoy giving gift cards because they can be assured the recipient will be able to buy what they really want, and they also enjoy receiving gift cards for the same reason.
In the last couple of years, eGifts have appeared and have changed the industry to a degree. Physical gift cards still reign supreme for shoppers that prefer to give a physical gift, but eGift use is on the rise as awareness of their online and mobile functionality become more prevalent. They are also great for giving gifts to folks that live far away or when immediate delivery is needed.
Although many retailers think of gift cards as a holiday product, the cards are actually an evergreen product that can boost foot traffic and be an important contributor to the bottom line year-round. The products have become so popular that demand for them is constant and they do not require promotions to sell, unlike most other retail products.
Additionally, three quarters of shoppers who purchase gift cards do some shopping for themselves at the same time. Nearly 75 percent of these shoppers will spend more than $20 in addition to the gift card purchase.
What is the most critical factor to consider for a gift card program?
Omnichannel! Consumers like purchasing and redeeming gift cards through a variety of channels, and more than half of shoppers like the option of giving either physical gift cards or eGifts. It is also important to consumers that their gift recipients can redeem their gift cards in person, online or via mobile devices.
Interestingly, 46 percent of consumers still prefer providing cashiers with a physical card when redeeming, but 43 percent said they don’t mind redeeming via mobile wallet or physical cards. About one in ten consumers prefer not to carry around plastic cards at all. And whether a gift card is open or closed loop does not make a huge difference to shoppers – they will still happily redeem them.
Furthermore, whether consumers give physical gift cards or eGifts can depend on the individual situation. When shoppers need gifts to arrive right away or are buying for a younger audience living a digital lifestyle, eGifts are a go-to. For those that want the recipient to have a physical gift, traditional gift cards are a top choice.
Can you tell us about the emergence of the gift card exchange space?
Despite their popularity and versatility, consumers may sometimes find themselves with well-intentioned gift cards that go unused – like when you receive a gift card for a store where you don’t frequently shop. This has resulted in the creation of gift card exchange services online and in retailers across the country.
Gift card exchanges began popping up after consumers started selling or trading their unused gift cards on their own – often through unsafe channels like Craigslist. Gift card exchanges now allow consumers to sell their gift cards for a payout that is less than the gift card’s value, and purchase other previously owned gift cards at a discount.
We encourage consumers to educate themselves on gift card exchanges before selecting one, as the services are still new and not all offer equal experiences to shoppers. We offer several tips for having a positive, safe experience with gift card exchanges on our website.
What should the payments industry know about the Retail Gift Card Association (RGCA)?
While we’ve been a voice for the closed loop gift card industry for many years, we used to only accept retailers into membership. However, we recently announced expanded membership opportunities to other members of the closed loop industry that have a vested interest in industry growth and protection.
This broader base of support will allow a stronger voice for closed loop gift card trends, research, fraud concerns, and potential impacts of proposed legislation.
It’s critical in the ever evolving payment industry that we are represented by not only our core stakeholders, which are retailers, but also all of the other partners that are in one way or another tied to the overall success of the closed loop gift card industry. Together, representing a unified voice to address the many facets and challenges of the gift card industry, we will be stronger.