Why Retailers Should Digitize Their Gift Cards

0aaaElizabeth Mead CrayPay

Already a force in retail, gift card growth shows no signs of letting up. By 2025, the global market for gift cards is expected to reach $506 billion, up from $318 billion in 2017. That’s no surprise. Gift cards have been the most requested item on consumers’ holiday wish lists for 12 years running, according to the National Retail Federation.

The real beginning of the gift card’s popularity was in 1995, when Blockbuster replaced standard-issue paper gift certificates with plastic cards to combat forgeries. The convenience a durable, wallet-sized card offered for both gift givers and recipients fueled the trend that now sees shoppers purchasing an average of four gift cards in a single holiday season.

With the boom in mobile payment technologies, the gift card industry is well into the next stage of its evolution. While physical gift cards are still the most common, more than half of consumers are interested in adding gift cards to an app or digital wallet. For younger adults, the interest leaps to 69% of users. As consumers become even more comfortable with digital payments, physical wallets filled with plastic cards will be replaced by smartphones and digital wallets.


Digital Advantages For Retailers

Forward-looking retailers are adapting by offering digital gift card options that customers can easily redeem and reload from within a mobile app, such as Gyft. Beyond upping the convenience factor for consumers using gift cards, digital offers new gift-giving options. A nearly forgotten birthday or spontaneous thank you gift is easily solved when customers can purchase a digital gift card online and deliver it almost instantly to the recipient via social media or text.

Like their plastic predecessors, digital gift cards also have advantages for retailers. To begin with, they increase sales, because three out of four gift card users spend an average of $38 more than the card’s value.

Moving gift cards to the digital space also can encourage new customers to participate in a retailer’s loyalty program, especially when the digital experience and in-store experiences are integrated. Loyalty programs can pick up where the original gift card balance leaves off by offering promotions and discounts designed to drive additional visits and purchases. On average, loyalty program members spend $42.33 more with traditional retailers than their nonparticipating counterparts.

Digital gift cards also allow retailers to engage customers on their mobile devices, thus providing new opportunities to personalize offers and encourage repeat purchases. Consumers welcome these notices: 78% are receptive to receiving email or text messages reminding them about their remaining gift card balances or alerting them about special offers.

Finally, because digital gift cards are user-specific and not anonymous, retailers gain valuable insights into who their customers are based on consumers’ online purchase data.

Three Reasons To Deliver Digital Gift Cards Today

Along with the additional advantages for retailers, the enhanced buying experience is a digitized gift card’s real game changer. Retailers offering digital gift card options today — or in the near future — are well-positioned to ride the wave of increased consumer adoption in coming years.

As you consider the options, keep three key factors in mind to ensure your program delivers the best buying experience and drives sales:

1. Smartphone access is a smart move.

Digital gift cards that are stored and redeemed from the user’s smartphone are growing in appeal, as evidenced by the 40% of consumers with a stated preference for scanning gift cards from their phones at point of purchase over carrying a physical card or printout.

2. E-gifting is the future.

Being able to purchase a gift card via web site or mobile app is a major differentiator for retailers who offer that option. The convenience factor facilitates last-minute shopping and enables consumers to both purchase and give the gift digitally. Consider going even further to meet consumers where they are by enabling gift card delivery via social media platforms. This type of contextual commerce is particularly appealing to younger consumers, with 60% of 18- to 34-year-olds saying they are interested in receiving gift cards through social networks or messaging apps.

3. Millennials live online.

Millennials spend more money online than any other age group. Along with the convenience of being able to do their shopping with a few taps on their smartphones, digital gift cards appeal to Millennials’ interest in integrating their purchasing with loyalty and incentive programs. Tying digital gift cards into a rewards program by offering extra points or discounts to members can help retailers acquire new customers and then encourage them to become repeat buyers and bigger spenders.

Gift cards are already a part of your business model. Going digital now keeps retailers ahead of the curve by enhancing the buying experiences that can generate increased sales and customer loyalty.


Elizabeth Mead is the Chief Marketing Officer of CrayPay, a free app that drives mobile payment adoption by offering to instantly pay a portion of every purchase made. A seasoned, award-winning marketing strategist and certified Project Manager, Mead brings a unique point of view and blended tactics gained from years generating powerful results for her clients.

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