Indications positive for closed-loop holiday spend

With Christmas 2011 now in the past, closed-loop gift card providers are intent on pushing through to the new year. If First Data Corp.'s SpendTrend Closed-Loop Prepaid Cards November Analysis is any indication, the 2011 holiday season should prove especially bountiful for purveyors of gift card programs.

The SpendTrend analysis, which tracks U.S. activations and redemptions of closed-loop, merchant-branded prepaid cards, showed that activation transaction growth in November 2011 was up 12.3 percent over November 2010. Additionally, activation dollar volume rebounded in November 2011, with an overall growth of 16.7 percent, reversing a three-month period of growth slowdown, First Data said.

It was a good sign for gift card activity for the 2011 holiday season, according to the company. Redemption dollar volume and transaction growth both reached yearly highs in November 2011, with overall redemption dollar volume growth at 24.8 percent. That number indicated the fifth consecutive month that overall redemption dollar volume growth exceeded 20 percent.

Furthermore, overall redemption transaction growth in November 2011 was up 23.5 percent from November 2010, First Data found. "Consumers seem poised to increase their gift card utilization this holiday season," the company said. "Indications are pointing to consumers using gift cards more this holiday season and it will be interesting to see if activation dollar volume continues to increase through the year's end," said Silvio Tavares, Senior Vice President and division manager of First Data Global Information and Analytics Solutions, which publishes SpendTrend.

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