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A gift card is a prepaid debit card that stored a specific amount of money that can be used in a variety of purchases. They can be classified into open loop and closed loop cards and are basically issued by retailers and banks. They are available in plastic-type and digital form. Gift cards basically replace cash and enable the user to receive service or products from stores, malls, bazaars, etc. The gift cards are basically used by employees, corporate bodies, and people from another field. In short, gift cards are modern ways of cash envelopes that were given on special occasion such as marriages, birthdays, etc. as they are intended for shopping, entertainment, dining, and other expenses.

The global gift card market is estimated to account for slightly less than US$ 400 billion in terms of value in the year 2018 and it predicted to grow at a CAGR of 10% during the forecast period (2019-2027)

Drivers

Rising adoption of gift card across the corporate sector for offering an incentive to recognize the employee's contribution and achievement is primarily fueling the market growth of the gift card. Gift cards are safe and convenient and have shown to be an excellent way of recognizing employees' achievement and reward them for their performance. According to the Coherent Market Insights, approximately 25-35% of a merchant’s gift card revenue is driven by B2B sales of gift cards. Hence, the growing adoption of gift cards across corporate sector is one of the major driver growth factors for the global gift card market.

Market Opportunities

A growing number of social media platform such as Facebook, Instagram, and Pinterest, where users can sell products directly to other users through their social media account, without need of third-party and some media platforms have also started selling gift cards. This factor is estimated to offer lucrative growth opportunity to the market of the gift card. According to the Coherent Market Insights, Facebook now allow its users to give gift cards to friends through Facebook. The user just needs to pick the store and provide the amount, and their friends will receive a Facebook gift card in their mail.

Market Restraints

Growing cases of gift card fraud around the globe are expected to hinder the market growth of gift cards. Gift card fraud composed of cloning, physical theft of the card, and programming errors at the merchant end and other Scams such as “Card Not Present” scam is also prevalent, where cybercriminals record the numbers on the card and keep the track on cards whether it has been activated and once the card is activated, the thief can easily use the card number illegally to make purchases. For instance, in June 2015, Starbucks suffered two gift card frauds. One in which cybercriminals transferred the card balances to other cards that they controlled and the other in which fraudsters were able to get the details of bank accounts linked to the consumer’s Starbucks gift card, which helped them to quickly drain attached bank accounts.

Key Takeaways

On the basis of merchant, restaurant segment has dominated the gift card market in 2018 with a 28% of market share in terms of value, followed by department store and coffee shops.

Market Trends

An increasing number of retails that provide gift cards are expected to foster the market growth of gift cards over the forecast period. Previously, retailer types that offered gift cards were mainly supermarkets or large departmental stores were the only retail type that used to offer gift cards. However, now restaurants and coffee shops, have also started offering gift cards in the form of loyalty cards or luxury dining gift cards via universal gift card providers. For example, movie theatres and Disneyland offer gift cards through universal gift card providers and this trend is gaining traction in developed countries, such as the U.S. and the U.K.

The growing popularity of corporate cards in Europe is projected to augment the market growth of gift cards. According to the Coherent Market Insights analysis, in Europe, over 50% of companies are shifting their incentive spending on employees from pure sales incentive rewards programs to corporate gift cards. With a growing trend of companies adopting gift cards as a means of recognizing employees for their contributions and achievements is projected to continue over the forecast timeframe and this will favor the market growth of gift cards.

Competitive Section

Key players operating in the global gift card market are Apple Inc., Amazon.com Inc., Best Buy Co., Inc., Starbucks Corporation, Target Corporation and Wal-Mart Stores, Inc.

Few Recent Developments

National Gift Card Corp. 

  • In October 2016, National Gift Card Corp. launched a retail partner gift card agency, which aids merchant brands in managing gift card programs. The agency provides benefits such as bulk purchase, lead generation, card printing, etc. 
  • In April 2015, National Gift Card Corp. announced the expansion of its rewards and loyalty gift card programs through its new website as www.ngc-group.com. This expansion includes added features for incentive and loyalty solutions for gift cards and merchandise, rebate program, product introductions, and eGift cards.
  • In October 2015, National Gift Card Corp. announced its customer relationship partnership with the Manna Group Script, which is a fundraising campaign organizing company. This partnership enabled Manna Group Script to offer digital gift cards in its fundraising campaigns.

Edge Loyalty Systems Pty Ltd.

  • In April 2015, Edge Loyalty Systems Pty Ltd. announced that Emerchants Limited, which is a payment solution provider, had renewed its customer partnership agreement with Edge Loyalty Systems Pty Ltd. for a period of three years
  • Through this agreement, both companies will focus on identifying and implementing new business initiatives
  • In December 2015, Village Roadshow Ltd., which is a parent company of Edge Loyalty Systems Pty Ltd., acquired international risk management sales promotions consultancy, Opia. The objective of this acquisition was to expand the presence of Village Roadshow Ltd. in the digital business space in the U.K. market.

Market Taxonomy

By Type

  • Universal accepted open loop
  • Restaurant closed loop
  • Retail closed loop
  • Miscellaneous closed loop
  • e-Gifting

By Merchant

  • Restaurant
  • Department store
  • Grocery stores/food supermarket
  • Discount store
  • Coffee shop
  • Entertainment
  • Others

By Region

  • North America
  • Europe
  • Latin America 
  • Asia Pacific 
  • Middle East & Africa 
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