Though the economy may be struggling, a CreditCards.com survey ofgift card issuers shows that the gift card industry continues to innovate, with digital gifting offerings breathing new life into an already strong segment of the retail market.
Gift cards remain one of the most popular gifts among consumers. In fact, the gift card market is growing at least as fast as the general consumer spending market, says Michael Hursta, vice president of payments transaction company First Data Prepaid Services.
A $91 billion market, the gift card industry is expected to reach $100 billion in sales by 2012, according to the research firm TowerGroup.
But the biggest area of growth and excitement is the digital arena, as gift card issuers increasingly look to ways for consumers to send gift cards via email, mobile devices and even social media sites.
We surveyed 63 gift cards from major brands. More than half — 32 — have e-cards available. For many issuers in the survey, this was the first year that they had explored digital gifting For example, American Express, Best Buy, Gap and Pizza Hut all offered e-gift cards for the first time. Many issuers also embraced technology as a way for customers to manage their gift card accounts, with 55 brands letting consumers check their balances on the Web.
Gift cards are divided into two major categories. Open-loop gift cards are those issued by banks or credit card companies and are redeemable by any retailer. Closed-loop, or merchant-branded, gift cards are those issued by retailers for use exclusively with that retailer.
Typically, closed-loop cards have fewer fees associated with them than their open-loop counterparts, and this year is no exception. In fact, in this year’s survey, only two closed-loop cards — those by HEB grocery store and Pilot Travel Center — bear dormancy or maintenance fees.