What are Gift Cards?
A gift card is a type of pre-paid debit card that is usually loaded with a specific amount of money and can be later used for making financial transactions and purchases.
The first time McDonalds introduced Gift certificates was in 1972 as Christmas Gift Certificates. This helped set up a broader stage for the retail industry. However, in the mid-1990s, the first Gift card was produced by luxury department store Neiman Marcus.
Types of Gift Cards:
- Closed loop Gift cards – are gift cards designed to make transactions at a specific merchant or a group of affiliated retailers. Example – Store Gift Card. They are usually not re-loadable. And can be used both in-person and online stores. They are perfect for individuals who have a favorite store or regularly shop at specific outlets. Closed-loop gift cards often come with added perks, such as loyalty points or exclusive discounts, enhancing the overall gifting experience.
- Open loop gift cards – are versatile gift cards that can be used at a variety of outlets and merchant’s locations. Example – General Gift cards. They can be re-loaded with funds if required. And can be used both in-person and online stores. These cards are typically branded with major payment networks like Visa, Mastercard, or American Express, providing the recipient with the freedom to choose where to redeem their gift card.
These gift cards can be either physical or virtual. With the increase in adoption of digital banking platforms worldwide led by digital banking solutions, Virtual or mobile gift cards have recently gained immense popularity. These digital cards are stored on a mobile device and thus can be easily redeemed through mobile apps or via QR codes, offering a convenient and on-the-go gifting solution.
Global Market:
In 2022, the gift card market produced $499.4 million in revenue. According to Persistence Market Research, the global market is estimated to reach US$ 1,674.9 MN by 2033, rising at an 11.7% CAGR from 2023 to 2033.
Drivers affecting the growth of the Digital Cards industry:
This immense growth can be attributed to the increasing reliance on online payment methods, the rise of different digital banking platforms, the need for creating and maintaining brand awareness, and increasing customer engagement. Moreover, gift cards (physical or virtual) offer reliable and convenient tools by eliminating fraud for consumers as well as boosting sales for the service provider. As more and more consumers embrace the shift towards online transactions, the demand for digital gift cards continues to soar, signaling a paradigm shift in the way we approach gifting and financial transactions.
Various applications of Gift Cards Available in the Market: From Entertainment to Eateries
The digital gift card market is incredibly diverse, catering to the diverse preferences and interests of recipients. One of the key factors contributing to the industry’s growth is the variety of gift cards available in the market. These cards span across various categories, ensuring that there’s something for everyone. Here are some prominent types:
- Retail Gift Cards: These are perhaps the most common types, allowing recipients to shop at their favorite retail stores, both online and offline.
Example – Amazon gift cards – Amazon, the e-commerce giant, offers gift cards that can be used to purchase a vast array of products available on their platform. - Entertainment Gift Cards: Perfect for movie buffs, music lovers, and gamers, these cards provide access to streaming services, cinema tickets, or in-game purchases.
Example – Netflix Gift Card – Netflix, a leading streaming service, offers gift cards that allow users to access a premium subscription without the need for a credit card and provide the recipient with the freedom to choose their preferred content and enjoy a personalized streaming experience.
- Dining Gift Cards: Ideal for food enthusiasts, these cards offer a delightful culinary experience at popular restaurants and cafes.
Example – Starbucks Gift Card – Starbucks, a global coffeehouse chain, offers gift cards that can be used to purchase a wide range of beverages, snacks, and merchandise at their outlets, offering recipients a convenient way to enjoy their gift along with the pleasure of their favorite drinks or explore new menu items.
- Travel Gift Cards: Enabling wanderlust, these cards cover flights, accommodations, and other travel-related expenses.
Example – Airbnb Gift Card, Airbnb, a platform that connects travelers with unique lodging options, offers gift cards that can be used to book accommodations worldwide with the option to choose from a diverse range of stays, including cozy apartments, luxurious villas, and unique experiences. - Subscription Services Gift Cards: From streaming platforms to fitness apps, these cards unlock a world of subscription-based services.
Example – Spotify Gift Card, Spotify, a popular music streaming service, offers gift cards that grant users access to ad-free music, podcasts, and premium features and offers an excellent choice for music lovers, allowing them to enjoy their favorite music without any interruptions.
Because of the sheer breadth and depth of its applications, be it NFC or QR in the mobile payment world, digital gift cards provide a customizable and meaningful gift for each occasion, rather than a one-size-fits-all solution.
Innovation in Product Offering: Redefining Gifting in the Digital Age
As digital gift cards gain traction, the industry has seen a boom in innovative products and offerings to improve the entire gifting experience. With the added advantage of technological improvements, digital gift cards have provided a path for more innovative and personalized products, thus becoming more enticing than ever.
- Real-Time Delivery: The digital age is defined by instant gratification. Digital gift cards can be given in real-time, allowing the receiver to begin enjoying their gift card immediately via email, text messages, or a custom-branded landing page.
- Customization Features: Many platforms now allow users to customize the design and message on the digital gift card, adding a personal touch to the gesture of gifting. For example, A USA-based B2B digital rewards platform empowers businesses to send personalized digital gift cards to their customers and employees.
- Integration with Messaging Apps: Seamless integration with popular messaging apps enables users to send digital gift cards directly through their preferred communication channels such as WhatsApp and Telegram.
- Blockchain Technology: Some innovative platforms are exploring the use of blockchain to enhance the security and transparency of digital gift card transactions. For example – A leading digital gift card platform and a blockchain-based platform are partnering together to offer an innovative way to issue, track and redeem blockchain-issued gift cards.
These innovations not only elevate the user experience but also position digital gift cards as a dynamic and modern alternative to traditional gifting and make the act of gifting more meaningful and competent digital banking solutions play an important role in it.
Highlighting Case Studies from Across the Globe: Real-world Impact
To understand the real-world impact of digital gift cards in digital banking, let’s explore a few compelling case studies from different regions.
North America: The Rise of E-Gift Cards in Retail Giants
In North America, Amazon e-gift cards have embraced digital gift cards as a strategic move to boost customer engagement and loyalty. By offering e-gift cards with attractive discounts and promotions, Amazon has witnessed a significant increase in online sales.
Europe: Seamless Integration with Mobile Banking Apps
London based global neo bank offers integrated Digital Gift Cards services directly into their mobile banking app. This seamless integration allows users to purchase, send, and redeem digital gift cards without leaving the banking platform, providing a convenient and streamlined experience.
Asia: Digital Gift Cards Driving E-Commerce Growth
In the rapidly growing e-commerce markets of Asia, digital gift cards have become a driving force behind the surge in online shopping. A South-east Asia’s super-app is providing wide range of services including ride-hailing, food delivery, and digital payments. By combining the convenience of digital gift cards with the diverse offerings of e-commerce partners, this company has created a symbiotic relationship that benefits both users and merchants.
Africa: Financial Inclusion through Digital Gift Cards
In regions like Africa, where access to traditional banking services may be limited, digital gift cards have played a role in fostering financial inclusion. Kenya based Mobile wallet platform offers digital gift cards and leverages the widespread availability of mobile devices, allowing individuals to access and use these digital assets through their smartphones via Partnering Merchants. This not only promotes financial inclusion but also stimulates local economies by encouraging transactions within the community.
Concluding Remarks: The Future of Digital Gifting in Banking
To summarize, the convergence of digital gift cards through digital banking platforms is transforming the landscape of how we demonstrate gifting and perform financial transactions. The digital gift card business is primed for long-term growth, thanks to a phenomenal CAGR, broad offers, continual innovation, and impactful case studies from around the world.
MobiFin, our flagship digital payments platform, makes it simple, convenient, and secure to provide gift cards as a highlighted offering to your consumers. Allowing any service provider to benefit from gift card services supplied through their banking applications, together with developments in personalization and delivery features, will reinforce digital gift cards as a popular and important component of modern payment platforms.
The tale of digital gift cards is one of adaptability, convenience, and genuine connection in the broad fabric of digital revolution. Digital gift cards have effortlessly woven themselves into the fabric of our lives, creating a tangible connection between the virtual and the emotional, whether it’s a birthday celebration, a festive occasion, or a simple expression of appreciation.
