Investment in AI is expected to gain momentum over the next eight quarters by players across gift card value chain

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Globally, the demand for gift cards is increasing and along with that the need for Artificial intelligence (AI) is also rising. The rise in AI is focused on optimizing and streamlining the overall gift card operations. Development in machine learning has unfolded many opportunities for gift card companies. The ongoing socio-economic turmoil across the world due to COVID-19 is also fueling the requirement of AI in the gift card sector.

Data-driven decision making is creating demand for AI

Technological advancement surrounding e-retailing and monetary transfers have given customers the liberty to choose, buy, and send e-gift cards with just a few clicks. Moreover, it also provides significant growth opportunities to gift card companies. By using machine learning and data analytics, gift card issuers are focusing on customer acquisition and retention policies.

For instance, Epipoli, an Italy-based gift card issuer and one of the leading gift card issuers in Europe, has developed an AI-based platform. This platform can automatically manage the whole gift card architecture, from card issuance to use of the card, and offering various deals that can attract consumers. By using AI embedded data analytics, the company develops one-to-one marketing strategies, customized incentives, and loyalty programs.

Machine learning helps to offer personalized gift cards

Investment in machine learning is gaining importance in the gift card industry. Gift card companies that manage a merchant and consumer database are leveraging machine learning to understand consumers and offer them personalized gift card options. For instance, when a consumer purchases a gift card, the technology analyzes the customer’s profile and suggests a wide range of personalized deals based on location, profitability, and affordability.

Prezzee, an Australia-based online marketplace for e-Gift cards, uses machine learning to optimize its application which is being used by more than 120 retailers. Machine learning helps the application to perform predictive analysis and provides personalized gift card solutions according to consumers’ buying behavior. The technology also helps to analyze potential operational threats.

Investment in AI to curb security issues is expected to increase

The rising popularity of gift cards is also making the overall market more prone to fraud and cyber-attack. Nearly 15% of total fraud attempts in the e-commerce sector are gift card related. Moreover, the dependency on the online transaction has increased substantially due to the ongoing lockdown in many countries due to COVID-19, which increases the possibility of fraud and cyberattack. According to PayNXT360’s Q2 2020, Global Gift Card Survey over 37% of gift card companies plan to increase investment in AI-enabled security systems to prevent fraud.

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