Plastic Gift Cards Still Lead, but E-Cards are Growing Fast

In the age of Apple Pay and other electronic payment options, physical gift cards still reign supreme, with most shoppers still preferring to give physical cards and most frequently select denominations between $25 and $50.

Most shoppers will be giving gift cards this holiday season, and consumers love to receive the cards since they can use them to purchase what they’d like. Shoppers consider gift cards safe, versatile gifts for everyone on their shopping lists.

The Retail Gift Card Association (RGCA) recently completed its biannual survey of 1,000 consumers, and we asked about their use of gift cards and preferences for giving and spending the cards. We also explored shoppers’ willingness to embrace new gifting options like electronic gift cards (e-gift cards) and mobile wallets.

Overall, we found that gift cards will be popular holiday gift choices, with 70% of consumers planning to give at least one gift card this holiday season, and nearly half (49%) planning to give more than two gift cards.

However, we found alternative payments options are rapidly growing in awareness. Only six months ago, only 42% of shoppers had heard of e-gift cards, and now 75% have. There are many reasons why consumers choose e-gift cards over physical cards, with the top situations being when they need the gift to be delivered right away, when buying for younger people who live a digital lifestyle, or when shoppers want to avoid holiday crowds.

Our research found 10% of respondents currently use a mobile wallet, and half of respondents would be interested in receiving an e-gift card that was deposited directly into their mobile wallet or giving e-gift cards to others that could be deposited directly into their mobile wallets.

Although consumers consider gift cards a valuable choice, they are also good for business. We found that most consumers (76%) don’t require a sale or promotion to purchase a gift card. Additionally, 61% of shoppers who purchase gift cards also do some shopping for themselves at the same time, and of this group 72% spend more than $25 in addition to the gift card.

Gift givers like to choose different cards based on recipients, and there’s a little something for everyone. This season, spa or leisure gift cards will be most popular for significant others, coffee shop gift cards are favored for colleagues or friends, restaurant gift cards are most popular for parents or extended family, department store gift cards are most popular for children, and entertainment gift cards are preferred for extended family or friends.

With gift cards proving to be versatile, go-to gifts for the vast majority of consumers, there is an added benefit in the fact that 92% of shoppers know gift cards are safe to give.

It’s no surprise that shoppers buy gift cards time and time again, especially during the holiday season. In an age when payments technology continues to evolve quickly, we expect e-gift cards to continue to rise in popularity and we forecast that consumers will soon demand that gift cards be compatible with mobile wallets as well.

During this transitional time when plastic is still king but mobile payments are quickly accelerating, we’d advise retailers to offer shoppers a wide array of gift card options this holiday season, and begin considering more digital and mobile friendly offerings for the future.

Mary Donovan is the executive director of the Retail Gift Card Association.