The global gift cards market size was valued at USD 980 billion in 2021. It is projected to reach USD 3,845 billion by 2030, growing at a CAGR of 16.4% during the forecast period (2022–2030). A gift card is a prepaid debit card containing a certain amount of money that may be used to make purchases. Gift cards have minimum and maximum initial loading amounts and other restrictions. Gift cards are typically used to cover a portion of a transaction using cash, debit, or credit to balance the outlay. Many gift cards are registered online as a safety measure to reduce the risk of losses, allowing the remaining balance to be tracked and frozen if a card is lost.
Gift cards are easier to trace and offer greater security than cash, which can help stop fraud. The growing use of cutting-edge technology in the payments industry and increased global awareness of digital payments are critical drivers of market expansion. The widespread use of smartphones and the growing popularity of gift cards among businesses and financial institutions contribute to the market's growth.
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Increased Adoption of Smartphones to Support Market Growth
Gift cards have become more innovative with the rapid evolution of smartphones. The use of modern technology and marketing strategies has created different ways for gift card lovers and smartphone users to integrate everything into one convenient package. The rise in the adoption of smartphones is expected to boost the gift cards market growth by offering flexible & convenient ways of payment for customers. For instance, Gyft, available on iPhone and Android, is one of the most popular solutions. Users can load their gift cards into the app and use them whenever they are out shopping. More such integrations are expected to drive the growth of the market.
High Demand for Innovative Products to Bolster Market Growth
One of the most acceptable methods for businesses to make money today is through gift cards. Gift card firms can now generate more revenue due to ongoing technological advancements. Companies gain from these gift card developments because they make them more distinctive and appealing. For instance, tracking gift cards allows consumers to purchase and grant gift cards online and check the expiration dates of those cards. Additionally, it enables recipients to donate their gift cards to good causes. If the receiver does not use a card beyond its expiration date, the card's issuer is not billed. The market for gift cards is expanding as a result of such extensive new offers that are centered on the customer experience.
Lack of Security to Restrict Market Growth
The market for gift cards is significantly constrained by several security issues, including a high risk of hacking by thieves and hackers. For instance, GiftGhostBot was recently identified by Distil Networks. It had attacked approximately 1,000 websites to acquire gift cards, allowing access to the cards' balance. It now serves as an illustration of how the threat to the worldwide gift card sector is growing. Additionally, in their haste to make mobile gift cards as easy and affordable as possible, businesses like Target and Starbucks have missed security flaws that allow any consumer to utilize money put onto another shopper's gift cards. These security obstacles hamper the market expansion for gift cards.
Surge in Need for Gift Cards from Developing Countries to Spur Market Opportunities
Recent years have seen an increase in the demand for high-end products and technology developments related to payment solutions. This expansion is made possible by the existence of unmet needs and the rise in demand for better transactional solutions in nations like China, Japan, and Australia. The gift cards market is transitioning from plastic to digital gift cards as mobile usage and internet penetration increase globally. Additionally, during the forecast period, growth in the use of smartphones and digital wallets is anticipated to present chances for the gift cards market demand.
The global gift cards market is categorized into card type, end-user, and region.
By card type, the global gift cards market is segmented into Closed Loop and Open Loop Gift Cards.
The Closed Loop Card segment is the highest contributor to the market and is estimated to grow at a CAGR of 15.2% over the forecast period. As closed loop gift cards can be used only at one store or with one corporate brand, it ensures that gift card recipients return to the business to use it, which is profitable for companies. In addition, benefits such as providing an opportunity to businesses to make money on products purchased using the gift card, free activation for users, and others drive the adoption of closed loop gift cards. For instance, in August 2020, InComm Payments, which provides gift cards, prepaid wireless products, and other payment solutions, anticipated that an average of 4.7 closed loop cards per quarter were purchased in the first six months of 2020, with a 20% increase compared to 3.9 cards purchased per quarter in 2019.
The adoption of Open Loop Cards has increased among consumers and businesses, owing to security, efficiency, reliability, and flexibility. These cards provide ease in electronic payments without involving any credit provided. According to a survey conducted by Incentive Magazine, 37% of respondents reported open loop gift cards to be more effective than cash, while 76% responded similarly to cash. Moreover, in the wake of the COVID-19 pandemic, open loop cards have become more attractive to consumers, owing to their convenient availability and ease to use. The adoption of open loop gift cards, digital cards, and credit cards is expected to bring innovations in the payments industry, creating lucrative growth opportunities.
By end-user, the global gift cards market is segmented into Retail Establishments and Corporate Institutions.
The Retail Establishment segment is the highest contributor to the market and is estimated to grow at a CAGR of 14.3% over the forecast period. The retail industry has faced challenges such as retaining customers, managing & engaging employees, and keeping in touch with ever-changing customer expectations since the beginning. Over the years, it has been observed that independent retailers have developed their businesses in tough and competitive environments. Presently, it has become a necessity for retailers to come up with innovations and quickness of business capabilities to accommodate customer needs. Hence, they have started deploying or making continuous additions in attractive gift cards and vouchers to be competitive and different from others.
Furthermore, the global health crisis significantly impacts retailer segments engaged in accepting and providing gift cards in the market. Consumers' trends and preferences toward shopping have changed tremendously in terms of avoiding crowds & long lines and budgeting holiday spending. In addition, as retailers plan to shift away from Black Friday & offering deals and promotions in their stores, retailers are also encouraging shoppers to start their holiday shopping by providing alternative benefits for gift card purchases. These factors propel the use of gift cards used in the retail industry.
The Corporate Institution segment is the fastest growing. Benefits such as an increase in sales, improved employee performance, and an increase in loyalty boost the growth of the market in this sector. Moreover, most businesses are increasingly using gift cards as a reward tool for multiple groups, which is expected to create significant opportunities for the market. With an unprecedented COVID-19 pandemic, corporates are helping small businesses with gift cards from local stores to provide employees with customizable corporate gifts during festive seasons. In addition, with increased work from the home business model, corporates are essentially adopting gift cards for their employees working remotely. Therefore, these are some of the significant trends of gift cards among corporate sectors during the pandemic.
By region, the global gift cards market is studied across North America, Europe, Asia-Pacific, and LAMEA.
North America Acquires Maximum Market Share
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North America is the highest revenue contributor to the market and is estimated to grow a CAGR of 14.5% over the forecast period. This is attributed to government initiatives promoting the adoption of digital payments as alternatives to cash in numerous industries, including hospitality, banking, corporate institutions, and retail. Technological advances in product offerings, the growing adoption of digital gift cards in the United States and Canada, and an increase in the promotion of gift card programs via omnichannel all contribute to the growth of the gift card market in the region. In addition, North America has one of the world's most advanced and well-established payment infrastructures, which is anticipated to generate the profit potential for prepaid cards as a critical alternative to cash in the following years.
Asia-Pacific is projected to reach USD 1,235 billion by 2030, growing at a CAGR of 18%. This is attributed to the growing internet penetration, the rapid surge in the internet-literate population, and high disposable income. Festive season gifting, occasion-based gifting, personalized gifting, and corporate gifting all contribute to the demand for gift cards. Furthermore, an increase in retail business is expected to augment the market growth. The existence of several e-commerce giants such as Amazon, e-bay, and Alibaba also fuels the market growth.
Gift card vendors have started investing in this region, owing to improved ICT infrastructure in countries like China, India, Malaysia, Australia, and Japan, which are expected to create ample opportunities for the gift cards market growth in the region. The COVID-19 pandemic significantly impacted the region as consumers increasingly adopted gift cards for retail shopping. Awareness of eGift cards is expected to boost the market growth in the upcoming years.
Europe is the third-largest region. Numerous prepaid programs established by an Italian post office named PostePay have led to a rise in demand & adoption of gift cards in the region. The surge in adoption of these cards for online purchases, traveling, and distribution among children as cash alternatives also accelerates the growth of gift cards in Germany and Italy. For instance, petrol stations and banks in Germany are considered prominent locations for offering gift cards. Conversely, federal governments also announced support for the digital payment industry to promote innovations and new economic growth opportunities in the region.
Furthermore, the global health crisis has triggered massive demand for gift cards in the region. For instance, in September 2020, KPMG UK, a professional services network provider, and Gift Card & Voucher Association (GCVA) analyzed retail business-to-consumer (B2C) sales of gift cards & vouchers shifted from in-store to online with a 51.2% growth rate. In addition, this increase in digital gift cards has accelerated as consumers avoided physical stores during the pandemic.
List of key global gift cards market manufacturer profiled