The North American gift cards market size witnessed significant growth in the past and is expected to grow at a CAGR of about 14.2% during the forecast period (2022-2030).
A gift card is like a prepaid debit card with a specific amount of money loaded onto it, which can be used for purchasing goods. These cards often come with minimum and maximum initial loading limits, such as a minimum of USD 10 and a maximum of USD 500. Typically, gift cards cover part of a purchase while the remaining expense is paid through cash, debit, or credit. Many gift cards can be registered online to minimize the risk of loss, allowing users to track their remaining balance and freeze the card if it gets lost. Gift cards offer increased security compared to cash and can be easily traced, reducing fraud risk.
North America holds the dominant revenue contribution worldwide, primarily due to government initiatives encouraging the adoption of digital payment options in various sectors like hospitality, banking, corporate institutions, and retail. The retail industry in the United States and Canada has witnessed an increase in the use of digital gift cards, supported by technological advancements in product offerings. Furthermore, the growth of gift card programs through omnichannel strategies further drives the expansion of the gift card market in these countries.
In North America, Gift cards share similarities with prepaid debit cards and have gained popularity among consumers for their convenience, flexibility, reliability, and security as a payment method. They play a significant role in electronic payments, representing a noteworthy portion. According to Worldpay's 2018 report, gift cards contribute 2% of e-commerce spending and 1% of point of sale (POS) spending globally.
With consumers consistently connected to shopping platforms and utilizing various payment methods, including mobile apps, the rapid growth of digital commerce, particularly on mobile devices, presents an opportunity for merchants and issuers. They can leverage this trend to adopt more innovative and seamless payment options, utilizing new technologies to cater to their customers' needs.
In North America, the continuous advancement of smartphones has brought about increased innovation in gift cards. Integrating modern technology and strategic marketing approaches has given rise to new and convenient ways for gift card enthusiasts and smartphone users to combine their preferences into a user-friendly package. This convergence is expected to propel the gift card market forward, as the widespread adoption of smartphones offers customers flexible and convenient payment options.
A notable example is Gift, a highly popular solution on both iPhone and Android platforms. With gifts, users can load their gift cards into the app and utilize them while shopping, providing a seamless and streamlined experience.
The gift card market faces several security challenges that significantly restrain its growth. One prominent concern is the heightened risk of hacking and theft by malicious individuals, jeopardizing gift card security. An example of such a threat is the GiftGhostBot, discovered by Distil Networks, which targeted nearly 1,000 websites to gain unauthorized access to gift card balances, exposing vulnerabilities in the system. This incident serves as an illustration of the growing threats faced by the gift card market.
Furthermore, certain companies like Target and Starbucks have inadvertently overlooked security vulnerabilities in their endeavor to make mobile gift card rollouts convenient and cost-effective. This oversight has resulted in instances where any shopper can utilize funds loaded onto another gift card, presenting security loopholes. These security weaknesses impede the growth of the gift card market.
In recent years, there has been a notable rise in the demand for advanced payment solutions and technological advancements in the industry. This trend has been observed globally, with countries showing untapped potential and a growing need for more efficient transactional solutions. As mobile usage and internet penetration continue to increase, the gift card market is experiencing a shift from traditional plastic cards to digital gift cards. Furthermore, the widespread adoption of smartphones and digital wallets presents promising opportunities for the gift card market in the foreseeable future.
The North America gift cards market is segmented into card type and type.
By card type, it is further segmented into open and closed-loop cards.
The closed-loop card dominated the market and is expected to register a CAGR of 16.6% over the forecast period.
By type, it is further segmented into B2B and B2C.
The B2B dominates the market and is expected to register a CAGR of 12.6% over the forecast period.
The North America gift cards market is segmented by country: U.S. and Canada. The US dominated the market with a CAGR of 14.2% during the forecast period.
North America is crucial in driving the gift card market due to its technological advancements, innovations, and substantial investments across various industries. The governments of countries like the U.S. and Canada have actively promoted digital payments, further boosting the market. Corporations prefer using gift cards instead of cash to reward and incentivize their employees. Additionally, the gift card market in North America benefits from the region's holiday seasons and gift-giving occasions, such as Christmas, which contribute to its growth.
North America is expected to witness positive growth in the gift card market during the forecast period. This can be attributed to increased government initiatives to adopt digital payment alternatives, particularly in hospitality, banking, corporate institutions, and retail sectors. The retail industry in the U.S. and Canada has shown a significant uptake in digital gift card adoption, supported by technological innovations in product offerings. Promoting gift card programs through omnichannel strategies further drives regional market growth. Moreover, North America boasts one of the most advanced and well-established payment infrastructures globally, presenting lucrative opportunities for prepaid cards as an effective cash alternative in the coming years.
The US is prominent in the gift card market, leveraging technological advancements, a robust retail sector, and government support for digital payments. With a well-developed payment infrastructure, the US provides a favorable environment for adopting gift cards. The retail industry in the country demonstrates significant usage of digital gift cards, while corporate institutions frequently utilize them to incentivize employees. These factors collectively drive the growth of the gift card market in the US.
Canada plays a substantial role in the gift card market, supported by its robust economy, advanced payment infrastructure, and widespread digital adoption. Government efforts to encourage digital payments and the growing utilization of gift cards across sectors like retail and hospitality drive the market's expansion. With a population that embraces technology and seeks convenient and secure payment solutions, Canada offers a favorable landscape for the gift card industry, presenting promising growth opportunities.
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