Apr 5, 2010

Gift card use declines despite holiday buyingBy CentralValleyBusinessTimes.com

Thanks to the recession, use of prepaid and gift cards in the United States dropped from 66 percent in 2008 to 61 percent in 2009, according to a report from Javelin Strategy & Research of San Francisco.

The decline in gift card sales and value began to turn around by the end of 2009 and will regain momentum in 2010 along with prepaid products, the research company predicts.

Companies that focus on the right features, messages and market trends can compel more consumers to buy more stored value and gift cards, the report says.

“As an example, while overall use dropped in 2009, in the online channel pay-before products such as prepaid and gift cards are flourishing,” says Mary Monahan, managing partner and research director. “Government regulations that restrict gift card fees and expiration dates favor consumers and are vital to building the trust that can build adoption and use. Lower costs and enhanced functionality are luring consumers back and boosting the volume and dollar value of cards they purchase.”

Despite last year’s drop, Javelin forecasts that prepaid usage will more than double by 2014 and gift cards to more than triple — the latter expected to attain $6 billion five years into the future.

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