Digital gift cards expected to post strong growth in the US

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By end of 2016, gift card sales in the US is expected to reach USD 144 billion, an increase of 12.6% over 2015. E-gifting segment experienced a growth of 32% during the first two quarters of 2016, outperforming the overall industry growth. Previously, usage and services related to gift cards were limited. But scenario has changed steadily in recent years. Companies such as Blackhawk Network and InComm have expanded their physical distribution of virtual cards of their partners. There are platforms such as Cardpool and CardHub which are providing the option of unused gift card exchange that cater to consumer spending habits. Taco Bell and Starbucks, which have active m-commerce applications, allow consumers to gift digital gifting cards which can also be used for in-store payments. According to estimates, over 26% of Starbucks payments are channelized through gift cards on mobile app.

It is quite evident that digital gift cards are new source of revenue generation, which is expected to grow in coming years. However, there are only small segment of retailers who are actively utilizing this opportunity. This segment faces certain prominent challenges. Management of Omni channel approach through mobile, desktop and laptop is one the most prominent of all. Also, there are certain retailers who do not have proper mind set towards digital gift card implementation into the business which results in lack of prioritization. Another issue with digital gift cards is that, there are very few physical stores wherein they can be redeemed. In addition, complex processes reduce digital gift card usage and adoption among consumers.

On the other hand, if retailers make digital gift cards convenient to be used in any format and customizable at consumer end, it will add to the increased usage. Ability to set low cost denomination is also expected to work along similar lines. Gift card sales are expected to reach USD 215 billion by 2020 and e-gifting options are likely to play a key role towards the same.

To know more and gain deeper understanding of prepaid card industry in the United States, click here