The retail landscape in 2023 is being shaped by a variety of factors, including rising inflation and economic uncertainty. As a result, consumers are becoming increasingly discerning when it comes to how they spend their money. One trend that has emerged in response to these conditions is the growing demand for value-added gift cards.
These gift cards offer consumers extra benefits beyond the face value of the card, such as cashback or discounts, making them an attractive option for those looking to stretch their budgets. Amid the growing demand for value-added gift cards, the trend of strategic alliances has also emerged in the space in 2023.
Credit unions are not only seeking to empower their members with greater purchasing power amidst the challenges posed by inflation and economic uncertainty but are also exploring new ways to foster member engagement and cultivate relationships with local merchants. To this end, credit unions are tapping into the Prizeout gift card program as a strategic tool for achieving these objectives.
Nine of the participating credit unions are using an application programming interface (API) to connect to digital gift card technology offered by Prizeout. Local merchants fund the program by determining their own bonus levels based on data provided by Prizeout's platform. Upon a credit union's sale of a gift card, Prizeout transfers the gift card's core value to the merchant.
When a consumer subsequently makes a purchase at participating retailer using their value-added gift cards, Prizeout and the credit union will earn a portion of the bonus value as revenue for each digital gift card that is sold. This creates a mutually beneficial arrangement for all stakeholders involved, with credit unions and local merchants strengthening their relationship while also providing customers with enhanced purchasing power and unique rewards. The demand for value-added gift cards is also growing in the earned wage access segment.
Many of the earned wage access providers charge users US$3 to US$5 every time they ask for instant access to earned income ahead of payday. This value can add up quickly if users ask for payouts frequently, thus having an impact on their disposable income. As a result of this, many seek alternative credit options such as buy now pay later schemes instead of earned wage access.
Consequently, to boost the appeal of earned wage access among professionals, ZayZoon introduced the gift card pay-out approach, which not only gives them access to funds but also enables them to stretch their funds. The firm, which serves hourly workers at 4,000 small and medium-sized enterprises, is seeing gift cards as a key element to demonstrate financial responsibility among its users.
With the added benefits of cashback, discounts, and rewards, value-added gift cards are offering a unique value proposition to consumers. These innovative gift card programs, launched by credit unions and ZayZoon, are expected to gain more traction as prices continue to rise and consumers look for ways to stretch their budgets. Financial institutions and merchants that offer these types of gift cards will be well-positioned to attract new customers and build loyalty among existing ones in 2023.
To know more and gain a deeper understanding of the gift card market in the United States, click here.