Gift Cards Market by Type (Open Loop and Closed Loop), Sales Channel (Instore and Online), End-use (Retail and Corporate), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021–2028

Global Gift Cards Market Insight

The global gift cards market size is predicted to garner a revenue of $1,396.01 billion in the 2021–2028 timeframe, growing from $437.78 billion in 2020, at a healthy CAGR of 15.4%.

Market Synopsis

Increase in the demand for online shopping with the increased use of smartphones might drive the global gift cards market growth.

However, the lack of security for gift cards might restrain the market growth during the forecast period. 

According to the regional analysis of the market, the Asia-Pacific gift cards market share is anticipated to grow at a CAGR of 16.0%, by generating a revenue of $301.54 billion during the review period.

Gift Cards Market Overview

A merchant or bank typically issues gift cards, which are also known as gift certificates, gift tokens, prepaid cards, or gift vouchers. Furthermore, gift cards are used as a marketing tactic to promote businesses, attract new consumers, raise brand awareness, decrease fraud, and boost sales by retailers and ecommerce business. Moreover, a gift card can be used as a substitute for cash at a specific store or business store for purchases of goods or services.  They are sometimes referred to as cash cards since they are issued by merchants and marketers as part of a marketing campaign to persuade the receiver to come in or return to the store.

Covid-19 Impact on Gift Cards Market 

In March 2020, the World Health Organization declared COVID-19 as a pandemic, which resulted in restrictions on travel and disturbances in financial markets, as well as negatively impacted supply chains and production levels. The coronavirus pandemic has unleashed a series of unprecedented events affecting every industry. The gift card market has been altered as a result of the COVID-19 outbreak. The gap between physical gift card penetration and virtual gift card sales is decreasing. As a result of this, the focus of innovation has shifted to digital cards (e-gifting), sometimes known as e-cards. Physical gift card sales were hindered by store closures across the country due to the COVID-19 outbreak. Physical gift cards continue to occupy a significant share of the entire market, which has hampered the industry's expansion. 

Increase in the Usage of Smart Phones is Anticipated to Drive the Market Growth

The rise in smart phone penetration is likely to increase the gift card market by providing customers with more flexible and convenient payment options. One of the most popular solutions, for example, is Gyft, which is available on iPhone and Android. The software allows users to load their gift cards and spend them whenever they go shopping. In recent years, there has been an increase in the demand for improved products and technology improvements linked with payment solutions. This expansion is fueled by unmet needs and a spike in demand for improved transactional solutions. The gift card market is shifting from plastic to digital gift cards as the use of mobile phones and internet penetration grows globally. The market is predicted to rise as a result of an increase in the number of such integrations.

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Lack of Security for Gift Cards Might Restrict the Market Growth

The gift card industry faces a number of security challenges, including the risk of being hacked by hackers and criminals, which is a major roadblock to expansion. For example, Distil Networks, the global leader in bot mitigation, recently discovered GiftGhostBot, a bot that attacked approximately 1,000 websites in search of gift cards, resulting in a balance breach. It has become a model of expansion under difficulty in the global gift card industry. Furthermore, in their rush to make smartphone gift card implementation as simple and inexpensive as possible, merchants such as  Starbucks and Target have overlooked security vulnerabilities that allow any customer to use money placed on another shopper's gift card. 

Technological Advancements are Expected to Increase the Opportunities of Commercial Market Growth

Due to increasing economic pressures, several company sectors are getting more inventive in their approaches to expand their operations. Gift cards are likely to be used as a promotional tool in this case. Gift cards are seen as a vital source of quick revenue flow for businesses such as restaurants and cafeterias. During the COVID-19 pandemic, the significance of gift cards has fundamentally changed for these industries. Consistent consumer engagement with shopping, owing to rapid expansion in digital commerce, as well as an increase in the number of new technologies that enable customers with creative and seamless payment choices, are the primary growth factors of the market. Furthermore, increasing technological advances in gift cards assist organizations to increase sales by making their product offers more unique and appealing, hence propelling the gift cards market forward.

To know more about global gift cards market opportunities, get in touch with our analysts here.

Source: Research Dive Analysis

The open loop sub-segment is predicted to have a dominating market share in the global market and register a revenue of $724.93 billion during the forecast period. During the projected period, the open loop gift cards category is expected to increase rapidly. Open loop gift cards have gained popularity since they allow recipients to shop at different locations. Increased security is another important reason driving the expansion of the open loop gift card industry. Because these cards can be used at multiple retailers, they can be used even if one of them goes out of business. As a result, the gift card does not become obsolete. Given these considerations, the segment's expansion is likely to continue in the next years.

Source: Research Dive Analysis

The online sales channel sub-segment is anticipated to have the fastest market growth during the forecast period. It is predicted that the market shall generate a revenue of $706.05 billion by 2028, growing from $185.5 billion in 2020, with a CAGR of 17.9%. Online gift cards (sometimes given as free gift cards on larger purchases) are frequently used in development plans to promote businesses, raise brand recognition, reduce fraud, and attract new clients, among other things. As a result, these cards are used in a wide range of industries, including retail, food and beverage, consumer electronics, hospitality, and so on.

Source: Research Dive Analysis

The retail sub-segment is predicted to have a dominating market share in the global market and register a revenue of $876.72 billion during the forecast period. Supermarkets and food items, pharmaceutics and medications, hypermarkets, computers, and other communication devices are all part of the retail sector. Gift card sales in the country are expected to grow in the future due to the country's growing retail industry. High gift card acceptance is likely to be aided by the increasing penetration of supermarkets/hypermarkets and other food and restaurant chains.  

Source: Research Dive Analysis

The Market for Gift Cards in North America to Hold the Highest Revenue during the Forecast Period

North America is anticipated to be the fastest growing market during the forecast time period and reach $604.47 billion by 2028, with a CAGR of 15.0%. North America was one of the first regions to use gift cards widely. Gift cards are the most popular sort of Christmas present in the United States, which is contributing to the country's growing gift card market. Furthermore, in recent years, demand for gift cards has seen an extraordinary increase during holidays such as Christmas and birthdays, a factor that has aided market growth. Other popular occasions for which consumers are increasingly purchasing gift cards include thank you gifts, graduation, baby showers, and Mother's Day. Amazon, iTunes, Walmart, and Giant Eagle are just a few of the major stores in the region that sell gift cards.  

Competitive Scenario in the Global Gift Cards Market

Product launches and mergers & acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading gift cards market players are Amazon.com, Inc., American Express Company, Apple Inc., Best Buy Company, Inc., Blackhawk Network Holdings, Inc., InComm Payments, Qwikcilver Solutions Pvt Ltd., Target Corporation, Starbucks Corporation, and Walmart Inc. 

Porter’s Five Forces Analysis for the Global Gift Cards Market:

• Bargaining Power of Suppliers: Gift cards market contains huge concentration of distributors & suppliers and therefore, the distributors & suppliers’ control is predicted to be reasonable, resulting in moderate bargaining power of dealers.
  Thus, the bargaining power of the suppliers is considered to be moderate.
• Bargaining Power of Buyers: Buyers might have great bargaining power, significantly because of high players functioning in the gift cards market.
  Therefore, the bargaining power of the buyer is high.
• Threat of New Entrants: Companies entering the gift cards market are adopting technological innovations and e-gifting to attract clients. Therefore,
  the threat of the new entrants is moderate.
• Threat of Substitutes: There are many alternate products for gift cards depending on the company.
  Thus, the threat of substitutes is moderate.
• Competitive Rivalry in the Market: The competitive rivalry among industry leaders is rather intense, especially between the global players including Starbucks, Target, and Amazon Inc. These companies are strengthening their footprint worldwide. 
  Therefore, competitive rivalry in the market is high.