“What do I buy the person who has everything?” is not an uncommon question whenever birthdays and celebrations come around. In this situation, I have often opted for the ever-reliable gift card, and recent research shows that I am not alone: in the UK, around 38% of the population has purchased at least one card or voucher during the previous 12 months.
The gift card has come a long way since the first version was launched in Britain during the 1930’s as a “book token.” Today, the UK market for ‘gift vouchers, gift cards and stored value solutions’ is worth around £4 billion a year. One of the reasons for this success is the prepaid electronic card, which over the course of the last few years has grown dramatically.
With all the advantages that the electronic gift card offers to retailers and consumers, it’s no surprise that it’s such a hit. Retailers love it for the financial, marketing, and operational benefits, while consumers enjoy the convenience and practicality.
For retailers, the prepaid gift card has opened doors to new business opportunities, such as personalizing and packaging the card to promote their company’s brand. It is even attracting new clientele, for example young people who may not have had access to conventional banking accounts.
The prepaid card also has the potential to significantly lower the operating costs for retailers, “since interchange fees associated with credit cards are avoided with merchant issued gift cards.” What is interesting from the consumer side is the increasing number of prepaid card holders who are reloading funds onto their card – in the UK it is up to 18%.
Currently, the majority of gift cards in the UK are known as “closed loop,” which means that the card can be used only at the specified retailer. As the prepaid gift card market develops, so will the user options. “Open loop” gift cards are on the rise and can be redeemed across a whole range of retailers at point-of-sale terminals, driving us closer still towards a cashless society.
The benefits of prepaid gift cards are becoming abundantly clear, and as always with larger volumes and more funds at stake, security is the key to its continued success. Gemalto is securing these cards, complying with EMV standards, from production, through to tamper-proof packaging and delivery. So when you purchase one for yourself or give the gift of a prepaid card, you are getting a sense of security too.
For further information on the topic, I would suggest a recent article in The Retailer Magazine that elaborates on the expanding and developing electronic gift card industry.