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Insider’sreport Gift cards represent a large and growing market. Allied

on payments Market Research put the global market value at more than
$619 billion in 2019, and projects it will exceed $2 trillion
by 2027, charting a combined annual growth rate of 16.2
percent between 2020 and 2027. Mercator Advisory Group
puts the CAGR for the U.S. gift card market at 6 percent
through 2023.
Gift cards: the gift Merchants like gift cards because they provide free

advertising and are a great loyalty tool. Giving someone a
that keeps on giving merchant's gift card is one of the best recommendations a
merchant could hope for.

By Patti Murphy A consumer who receives a gift card, say, from a restaurant
ProScribes Inc. they've never patronized, is apt to redeem the gift card for a
meal there and probably splurge because most, if not all, of
uring a recent Merchant Sales Podcast my co- the tab is prepaid. And if they like the service and the food,
host, James Shepherd, and I were discussing gift they will return. This is backed up by Fiserv's research,
cards when James remarked that most agents which found that nine in 10 consumers who receive a gift
D don't actively promote gift card programs. card from a small business they've never visited said they'd
use the card to shop there and return for future shopping
This surprised me, because gift cards are big with expeditions.
consumers, as well as among merchants who understand
that gift card balances amount to interest-free loans, and Nearly three in four consumers also told Fiserv researchers
when redeeming gift cards, consumers generally spend that they regularly purchase gift cards from small
more than the value on the cards. businesses. This is an important data point, because gift
cards can be a free source of money for those businesses.
I can attest to this latter fact. There's a grocery chain I
frequent because it has an awesome rewards program. For Consumers leave a whopping amount of unspent money
every $50 spent I can save 10 cents per gallon when fueling on gift cards, with 51 percent forgetting to use money
up at the convenience store the chain also operates. The gifted them on a card, according to the consumer website
grocery and c-store chain also carries an array of gift cards, Bankrate. Bankrate estimates unspent gift card balances
and at times runs a special offering additional money off will total over $15 billion this year.
on gas for gift card purchases.
Depending on state escheat (unclaimed property) laws,
So I make it a point to purchase gift cards from this chain that's money that eventually could flow straight to a
and to stock up when a special offer coincides with a major merchant's bottom line. At the very least, it's an interest-
spending event, like Christmas or a home remodeling free loan they can put toward inventory, salaries or other
project. Once, I accumulated enough money off on gas business needs.
while buying materials for a new bathroom that I was able
to fill my Dodge Ram twice for free. (I'm talking about 26 Merchants that actively promote gift cards—such as by
gallons each fill-up, which given the cost of gas at the time, placing a card rack at checkouts or gift card buttons on their
amounted to more than $120 in savings.) ecommerce sites to spur impulse purchases—obviously
benefit the most from gift card programs.
I also use gift cards to shop at specific retailers, online or in
person. It's something I do to keep my credit and debit card Not surprisingly, the COVID-19 pandemic accelerated gift
information safe. But whether I'm shopping for hardware card demand. The gift card company InComm found the
or a new outfit, it seems I always spend more than the average number of purchased closed-loop gift cards per
amount of money that's on the card. consumer rose to 4.7 during the first two quarters of 2020,
from 3.9 in 2019. The average number of purchased open
Apparently, I'm not alone. Research by Blackhawk Network, loop gift cards (those bearing the card brand logos) grew
the gift card giant, found 69 percent of consumers have from 5.4 in 2019 to 7.1 in 2020, InComm reported.
purchased gift cards for themselves; 87 percent have
purchased them for others. Meanwhile, data published Some of this increase can be attributed to consumers seeking
by Fiserv suggests gift cardholders, on average, spend $59 to help out local merchants at a time when they couldn't
more than the value on a gift card when redeeming the necessarily shop in person due to COVID restrictions. I
card. know of many consumers who purchased gift cards from
their favorite restaurants during the height of the pandemic
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