The term “gift card,” as of the year 2021, is becoming something of a misnomer, as a gift card may or may not be given as a gift — and may or may not be presented in the form of a tangible “card.” In lieu of gifting, consumers are sometimes electing to buy gift cards, including eGift cards, for self-use as a payment vehicle. For retailers, they create opportunities for higher conversion rates and stronger loyalty. Bottom line, gift cards and eGift cards are becoming an essential part of the digital-first payments economy.
“Globally, gift cards are doing so much more than facilitating gifts. They are really an on-ramp to the digital payments highway for consumers,” Blackhawk Network CEO and President Talbott Roche told Karen Webster in a conversation.
And that on-ramp is emerging in an ever-increasing number of places. The gift card rails, she said, are showing themselves to be a seamless, convenient and inexpensive mechanism for transferring funds and transacting in both B2C and B2B contexts. Gaming, streaming and incentive-type disbursements are just a few of the various everyday payment solutions where gift cards are playing a role well beyond the gifting use case.
“This way of settling funds for transactions and payments becomes even more convenient and more seamlessly embedded into different commerce experiences,” Roche explained. “I think consumers are figuring out on their own that it’s simply more convenient or secure to personally use a gift card to buy digital content and services.”
That’s easily demonstrable in the rapidly expanding world of gaming, she noted, which has long since moved past its association with the favored habit of reclusive teenagers. Via the power of better technology and concepts like the metaverse, gaming has become intimately tied to every aspect of a consumer’s life.
The Gaming Angle
And the gift card — particularly its digital iteration, the eGift — is a tool that is nearly perfectly suited to gaming, and to the mini economies that these games tend to support. Blackhawk has seen incredible growth in the segment, with a CAGR of 85 percent over the last three years. That increase has been driven at least partially by the roughly one in five gamers who are now using gift cards as their preferred form of tender to purchase games, as well as to access features sold within the games. It’s seen as a safe way to transact, said Roche, as well as a substitute for cash-bound consumers who don’t have a credit or debit card but still want access.
“Emerging markets like Indonesia, India, Mexico, Brazil — they have a higher number of cash-based customers who want to participate in the digital environment and in these gaming environments,” she explained. “And they can do that by walking into a convenient physical location, purchasing the card and then loading the value into the game, right there on their mobile app or mobile device.”
And those purchases may not actually be for a physical gift card, but for an eGift card/digital card that they can access by scanning a QR code, enabling them to instantly load funds onto it. This isn’t a story about the digital card replacing the physical card — which Roche does not see happening anytime soon — but one about how the digital cards can augment and improve the reach of their physical counterparts. The future won’t be about buying digital cards only in digital channels, she said, but about accessing digital goods in physical channels, such that any consumer can walk into a store and access an “endless extension of the selection of content, using a QR code that can be generated right there on the consumer’s mobile device.”
Roche predicts that the future of gift cards will mostly be about expansion, not contraction, as gift cards — both physical and digital — are playing a larger and more strategic role in a larger number of segments. They are a factor in facilitating the explosive expansion of the gaming industry, but they are increasingly a lot more than that. They are also a loyalty offering that keeps consumers more tightly aligned with a brand — a la Starbucks embedding its gift cards into its mobile rewards program. And they are a channel through which government and aid agencies can quickly direct money into the hands of constituents during an emergency.
In the year of COVID-19, gift cards have in many cases been lifelines for consumers as they have looked for new ways to shop, to be entertained and to connect to each other. Gift cards, particularly in their digital form, were enabled for all of these use cases and more. And though consumers will eventually get back to the physical world, Roche said, the explosion and changing patterns of adoption the world has seen over the last year aren’t going anywhere. In 2021, she expects to see an omnichannel year unfold, based not on digital or physical channels for purchases or payments, but digital and physical.
It’s a reality that could not delight Blackhawk more, Roche said, as the many and varied applications of gift cards as payment solutions will be welcomed and useful for consumers and merchants alike.
“I think there’s tremendous growth right now, and that is going to carry forward. I’ve never felt as bullish about the space as I do today,” Roche said. “I think COVID accelerated the adoption of the QR code technology and comfort with mobile payments — and I think we’re going to see digital payment solutions and supporting gift card experiences in new and fresh ways.”
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