The next big development for the gift card industry could well be online gaming. While retail and dining continue to dominate as the top two categories for gift cards, online gaming has emerged as a solid third contender and is poised for further growth. The vast majority of consumers who bought their first online cards this year said they plan to do more in this space.
That’s according to Clover’s Q1 Gift Card Gauge survey, which polled 1,000 U.S. consumers on their gift card purchasing patterns. Clover is the point-of-sale and business management platform from Fiserv.
Key Findings
In 2023, nearly a third of respondents bought gaming gift cards, surpassing both the health & wellness (25%) and hospitality (21%) industries for the first time. What’s more, a whopping 84% of those who bought online gaming gift cards for the first time last year said they plan to do so again.
The online gaming market seemed to reach an inflection point during the pandemic, particularly as many Americans began working from home. Gift card spending on gaming increased in both 2019 and 2020, with consumers who bought gaming gift cards purchasing 70% more gift cards per quarter compared to the previous year.
Retail stores and restaurants remain the most popular areas in this space, with 57% and 52% of respondents purchasing gift cards in these categories, respectively.
Marking Milestones
Clover’s survey confirms that milestone events remain the biggest driver of gift card purchases. It revealed that 56% of consumers are planning to purchase a card in 2024 for milestone events. The most frequently cited events include weddings (36%), anniversaries (35%), and new family additions (31%).
The survey also found that digital wallets are an increasingly popular option, with 60% of respondents saying they plan to use them more in 2024. “The growth in digital wallets remains incredibly important given the industry and consumer trends,” said Jordan Hirschfield, Director, Prepaid Payments for Javelin Strategy & Research. “At Javelin we see a significant growth in moving from physical cards to digital cards, resulting in the market moving from 30% digital currently to 50% by the end of the decade.”
One counterintuitive result from the study was that consumers were slightly more likely to forget about using the balance on a virtual card than they are on a traditional one. While 41% of respondents said they had forgotten about a physical card, 39% said the same about a virtual card.
Hirschfield notes that there is an upside to this for the card issuers. “Unused balances highlight the opportunity to use balances and self-use stored-value accounts as constant touch points with consumers,” he said. “These allow for cyclical investment in prepaid stored-value accounts that rise from forgotten balances to revolving, loyal use items.”