Gift cards have evolved as a trusted digital payment method and became particularly popular as a cashless currency of choice amid the pandemic, facilitating things such as free school meals, volunteer shopping and gifting whilst people were apart.
Gail Cohen is the director general of the Gift Card and Voucher Association (GCVA) – a role she has held since 2015. The organisation has grown exponentially during this time and now has c.95 active members including major retailers and service providers.
Cohen’s role is to lead the association developing strategy and setting direction with the executive group, ensuring it represents its members and the industry across all key areas including: PR and media to raise the profile and value of the sector with key decision makers, consumers and stakeholders; liaison and advocacy with government, law commission and other key partners; introducing new services to assist members and add value to consumers; providing discussion, debate and networking opportunities, and providing insight, research and up to date information and news. Cohen also leads on members events meetings, and the annual GCVA conference.
Cohen works closely with the sector in the UK, Europe, USA and internationally, as well as with the GCVA’s members, to continually improve, develop and grow the services, the offer and the benefits to members and the wider industry.
She spoke to The Fintech Times to discuss how gift cards are paving the way for cashless payments more widely, as well as providing examples of how this is the case:
With eye-catching innovations, ground-breaking technologies and even new digital currencies taking up everyone’s attention of as the future of Fintech, the vital role played by gift cards has gone largely unnoticed by many observers.
However, with the rapid shift towards cashless payments (in just five years cash fell from over 50 per cent to just 17 per cent of all payments) many have turned to this tried and tested solution to meet the urgent demand for alternative payment methods.
Secure, simple and (increasingly) seamless, the humble gift card provides a ready-made solution. Add to these benefits, digital innovation in the sector and the hot-housing effects of lockdown. The term ‘gift card’ is now massively underselling the role this sector plays in modern-day transactions.
Here, we’ll look at the ways in which gift cards are contributing to our cashless society, examining the increased reliance on gift cards as a payment method throughout the pandemic, how adding them to mobile wallets is benefitting both consumers and retailers alike and the ways in which they are helping people control spending as living costs rise.
The rapid digitisation of gift cards through lockdown
The covid-19 pandemic further accelerated moves towards the cashless society and the growth of gift cards as digital currency. Year-on-year, sales of online gift cards and eVouchers soared by 117 per cent during the second half of 2020, due to restrictions which made physical gifting and purchasing more difficult. As restrictions eased, 27.5 per cent of gift card buyers said that their conversion to digital gift cards was permanent. This converted the sector into one that is now digitally led, unleashing a new wave of innovation that is taking gift cards beyond their traditional heartland.
One such expansion was their use by community volunteers. During social distancing and stay-at-home restrictions, the ability to transfer money through secure and flexible means became crucial. This was particularly true for volunteers supporting the vulnerable by doing their weekly shop or collecting essentials.
Preloading a gift card with funds offered an instant way for people to provide a payment method to these volunteers, without having to share bank cards or payment details.
Gift cards also played a crucial role in employee benefits, supporting key workers or helping people in need. They became the way for communities to buy meals for nurses or allow school meal allowances to be redeemed.
Gift cards also expanded their role in home entertainment and gaming. Gift cards enabled people to make in-game purchases or media subscriptions safely and securely. As a result, gift card purchase for self-use has continued to grow in popularity, with 7.7 per cent of monthly gift card buyers purchasing gift cards for themselves over 2021.
Gift cards for mobile payments and customer relationships
The innovations enforced by lockdown, meant that many gift card providers added digital options to their products and services. This means that many gift card providers now offer an ‘add to wallet’ function, placing their gift card onto phones or other devices.
This has transformed the relationship with gift card operators and their customers. For example, push notifications reminding a customer that they have a gift card balance to spend. Also, opportunities for retailers to send details of offers and promotions to gift card holders.
This is particularly valuable given the amount of top-up spend consumers add to gift card purchases. Also, how frequently gift cards encourage shoppers to upgrade to new products and brands they may not have tried before. This is reinforced by our latest State of the Nation research, which found that more than half of all UK shoppers have been introduced to a new brand or organisation via a gift card that they have received.
Gift cards for budget control
Gift cards are also a key strategy for consumers seeking to control their budget or that of their children. With rising inflation and the increasing cost of living, people are increasingly looking to budget more carefully and measure their spending. For example, people now purchase gift cards for a supermarket to set themselves a spending limit. With energy bills rising, gift cards are being talked of as a way to help people to pay their bills, through a contribution from family or as a way to distribute government grants.
Anyone who has been caught out by children making in-game purchases, will also recognise how gift cards protect bank accounts from being ‘raided’ by over-enthusiastic Fortnite fans.
Creating community ‘currency’
Furthermore, beyond the examples outlined here, there are many more emerging ways for gift cards to be utilised as a payment method for retailers and consumers alike. For example, the adoption of gift cards by local shops to create a form of ‘currency’ that helps to support local high streets and businesses.
Overall, it’s time that we moved on from viewing gift cards simply as a gifting method, and more as a payment method and fintech solution that is facilitating innovation in our cashless society. It’s clear that gift cards are likely to play an even more important role going forward, providing a convenient and secure method of payment. One that people trust, understand and to which they have ready access.