8 December 2014 – More People Than Ever Before Are Expected To Give Gift Cards As Presents This Christmas – What Do You Need To Know When Buying Yours?
Prepaid International Forum (PIF), a principal trade association for the prepaid card industry is helping businesses and consumers make informed choices when buying gift cards.
Last Christmas over 100 million gift cards were given as presents and in the last quarter of 2013 researchers reported double-digit growth for the majority of companies operating in the sector.
Alastair Graham, Co-Chairman of the forum‘s public relations committee, explains:
With gift cards and vouchers already worth over £5 billion in the UK, this Christmas industry experts expect to see £ 2.7 billion spent on such presents over the festive season.
Ironically, one of the reasons behind this growth is thought to be a cautiousness amongst consumers that is tempering growing consumer confidence.
Data from Deloitte* indicates that the key word for Christmas 2014 is going to be thrift. UK consumers are planning to reduce their overall expenditure compared to previous years and are less likely to be eating into savings or running up debts with their Christmas spending.
Gift cards are finding favour with Christmas shoppers as they reduce the chance of buying unwanted presents – 15% of the population say that they are more likely to increase their use of gift cards this year in order to ensure less waste this Christmas.
Availability and choice of cards is also greater than ever before, available from most large retail chains, from supermarket outlets and 11,500 Post Offices as well as online. Personalised printing also means that online orders can provide cards featuring photographs or personalised messages, making them a more appealing gift than ever before.
For many, gift cards are preferred over cash as a Christmas present, partly because they feel more like a gift. Cards can be gift-wrapped or personalised and are more likely to be used by the recipient as a treat, whereas cash gifts are often simply absorbed by everyday household expenses. Cards are also more secure in the event of being lost; they can be blocked and new ones issued, (it is important to keep hold of the receipt in case this happens).
So what types of prepaid gift cards will the nation be buying?
The big sellers over Christmas will be branded store gift cards, representing over 70% of the total gift cards sold to consumers in the UK. These are most often bought from brands people trust or as a gift for a person who knows exactly what they want to buy.
However, the fastest growing type of gift cards are those that can be used in multiple outlets, across high street retailers as well as through major online retailers such as Amazon.
In the last 3 months, sales of such cards have increased by 48%. These types of cards are often preferred because they give the recipient an almost unlimited choice of the type of present they can buy for themselves, from fashion, toys and electrical items through to DIY for home improvements and travel.
In the minds of many post-recessionary consumers they also offer greater security, not being limited to one retailer that might run into financial difficulties. The high profile insolvencies to established retailers just two years ago are still fresh in the public’s mind and therefore it’s understandable they are choosing to hedge their bets.
YouGov research** found that this was an important consideration for 69% of people considering buying a gift card which helps to explain their rising popularity.
Unlike single store gift cards, multi-store cards are regulated (under the EU E-Money regulation), which means there is a requirement for all the money on the cards to be ring-fenced. Therefore, should a company that has issued cards run into difficulties, the consumers’ money is still safe.
One area to consider when buying a gift card is to be sure of any fees that can be incurred. Most gift cards will have no upfront fees (in other words the amount you pay is the amount placed on the card as a present). However, some will carry fees that may be incurred over time.
As most gift cards are used within a few weeks or months of being received fees are rarely a feature but it’s always worth letting the person you are buying the gift card for know about them so that they don’t come into play.
Businesses are also contributing to the boom in gift card sales at Christmas, with many using them as festive rewards or bonuses for staff. 52% of sales for gift cards come from businesses, ranging from large corporates employing thousands of staff to small businesses with just a handful.
Research*** shows that using gift cards to say ‘thank you’ to workers has a huge impact on staff morale, loyalty and company reputation. For example, staff getting a Christmas bonus in 2014 will be significantly less likely to move to a different job in 2015. 71% of people surveyed said that they would actually turn down the chance of earning more money rather than leave a company that regularly thanks them for their efforts.
Notes to Editors
* The Deloitte Consumer Tracker Q3 2014
** YouGov Survey of 2031 UK adults
*** Usurv research of 1,000 workplaces across the UK
Facts about Gift Cards and Vouchers in the UK
- The size of the UK market for gift cards and vouchers is currently estimated at £5 billion.
- 48% of the market is made up of consumer sales, 52% sales to businesses.
- 9 out of 10 consumer sales are for single brand cards (known as ‘closed loop’ accounts).
- Cards regulated by the EU, requiring money loaded on the cards to be ring-fenced by the issuer, are open or restricted loop accounts (usable at multiple retail outlets) representing 6% of the current market.
- All ‘closed loop’ gift cards, paper vouchers and evouchers are unregulated products.
PIF is a global not-for-profit trade association established in 2007 to represent organisations involved in the supply of prepaid products and services. PIF acts as principal point of liaison between the industry and government agencies, regulators, consumer bodies and the media to promote the relevance and benefits of prepaid and e-money products. PIF is dedicated to the progression of the industry and acts as a catalyst for the development of sensible industry guidelines and codes of best practice. PIF members represent issuers of prepaid and e-money products, card schemes, payment processors and suppliers of services to the industry. To learn more about PIF visit www.paymentsinnovationforum.org
For further information
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PR Agency One
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