Gift card sales expected to reach $91B
Gift card sales are expected to reach $91 billion this holiday season, fueled by new regulations and consumer protections, a stateside research firm said.
According to Needham, Mass.-based TowerGroup, a subsidiary of Corporate Executive Board, predicts the growth in gift card purchases will continue through 2012, when sales are expected to reach $100 billion.
Aside from an expected increase in the use of gift cards, the group predicts that so-called gift card “breakage” or the value left on unused gift cards, will decrease by half, meaning that consumers will get better mileage out of their plastic.
The decrease is part of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, which places restrictions on expiration dates and fees on gift cards. The new provisions took effect Aug. 22.
“The new protections afforded to consumers under Title IV of the CARD Act have greatly increased consumers’ willingness to use gift cards as a form of gift giving,” said Brian Riley, senior research director, Bank Cards, at TowerGroup. “Additionally, as new technology, such as mobile and social media mediums, are used for electronic gifting, the gift card industry will position itself for long-term growth in both domestic and international markets.
The group’s research further shows that consumer preference for general-purpose reloadable network cards — also known as prepaid branded debit cards issued by a bank —is rising while sale of retail-specific gift cards is decreasing.
That finding does not seem to be a deterrent for one retailer, Walmart, which on Monday said its gift card is one of the “most-desired” gift cards, according to a recent poll by GiftCardRescue.com.