The Gift Card Economy: Exploring the Rise of Gift Cards

The greatest way of expressing love and gratitude is through gifting. Since the history of mankind, the act of gifting is an integral part of every society in the world.

In traditional society, people send tangible items as gifts but the transition into a digital society has revealed gift cards to be the currency of the act of gifting.

Some time ago before gift card adoption evolved to a substantial extent like it is today, it was considered nothing more than a worthless and inefficient plastic card.

Today in Nigeria, gift cards have become the perfect gift choice for gift givers and recipients as well because of their convenience, portability and value. The transition to a more digital society has also reshaped people’s shopping behaviour, stirring a massive adaptation to online shopping, hence, giving more credence and value to gift cards.

With the use of gift cards, gift givers need not worry about the type of gifts to buy. They just simply purchase the gift cards from stores and send them to the recipient, who will redeem them for any type of gifts suitable to them or find means of how to sell gift cards.

Gift cards serve as a surprise gift for a retiree, employee, friend, lover and many more and it is very important to choose gift cards with the highest resale value when gifting them. This will enable them to profit from the high gift card rates if they don’t want to buy gifts from the store and decide to sell them.

Some recipients can even sell gift cards for cash if they don’t need the gift item.

With the massive acceptance of gift cards over the years, gift card trading will continue to grow with the economy as it gives a more personalized, digital and convenient gifting experience.

The Magical Transformation: From Inefficiency To Efficiency 

The innovation of the first gift card in 1994 and other brands which later joined the gift card market in the early 2000s, was ensued by some bottlenecks which projected the invention as inefficient.

Apart from the major problem of gift card fraud which took a toll on the industry due to the feeble nature of the market, many customers did not utilise the gift cards they purchased.

Many people challenged the efficiency of gift cards when the New York Times in 2007 asserted that about $8 billion out of the $80 billion spent on gift cards in 2006 was not redeemed. In fact, due to the rate of unredeemed gift cards, some economists asserted that gift cards were poor gifts which were merely gifts bought for the issuing companies who earn “breakage” (unclaimed gift cards reclaimed by the issuing company) from them.

However, in recent times, due to the technological and e-commerce revolutions, the archaic perspective about gift cards had become history and gift cards have become the most desirable gifting experience.

The Trend Gap Of The  Gift Card Economy: An Exchange of True Value

When we consider the constant e-commerce and digital revolutions we live, one may understand that people are open to giving and receiving gift cards for many reasons like;

1. Flexible Spending And Unlimited Choice Of Gift Cards:

Even though there are some restrictions on the closed-loop gift cards which would force users to only spend the gift card on that same brand, 78.7% of people still use gift cards from strange brands and about 87.7% tend to become customers afterwards. However, an open-loop gift can be redeemed at any store that accepts debit and credit cards. This type of gift card is not restrictive to brand stores, hence, the versatility of gift cards makes it a perfect gift choice.

2. Gift Card Purchases Are Now Planned:

Unlike the old popular belief that gift cards gifting is not properly planned which makes it a poor gift, a gift card report by Incomm stated that 86% of gift cards purchased in the  US are planned and 55.8% of recipients received the gift cards for their brand of choice.

3. Number Of Unused Gift Cards Drop Annually:

In the early days of gift card usage, one of the problems was the big fraction of unredeemed gift cards. However, according to Bankrate, the number of unused gift cards reduced by 25% annually.

4. Gift Card Purchases For Personal Use:

Individuals tend to buy more gift cards for themselves than they did in the past ten years. According to research by Black Hawk Network, 33% of the gift cards purchased in 2019 were for the owners.

Some of the reasons individuals purchase personal gift cards are;

• Financial budgeting and diplomacy
• The convenience of gift card transaction
• The safety of gift cards
• An alternative method of payment

Conclusion

The gift economy is still a fast-growing one which has been predicted to reach about $440 billion by 2027. With the desire for convenience, value and safety in gifting and transactions, gift cards are the ideal gifting strategy and also, a very good way to make in-store and online transactions with ease.