Gift cards are one of the fastest growing categories in prepaid cards due to their versatility as a gifting and payment solution. Many companies are getting into the gift card space to capitalize on their growth potential. They are constantly looking for the next big channel of distribution, and devising new uses and applications to keep the gift card space exciting and fresh. Recently some companies have come up with a unique way to use prepaid gift cards – as an investment tool for the stock market.
Leading prepaid and payments products company Blackhawk Network and Stockpile have collaborated to launch Stockpile's "Gift Cards for Stock", which are available at select US retailers including Kmart, Buehler's Fresh Foods, Wegman's and Safeway. This prepaid gift card, which is redeemable online to open and fund an account with stock, can be purchased as a gift for others or for own use. Stockpile's gift card comes in fixed denominations of $25, $50 and $100.
According to a survey commissioned by Blackhawk in September 2015, only 28% of American adults own stock. The survey revealed that 73% of millennials, between ages of 18 to 34 years, do not own stock mainly due to reasons such as lack of knowledge about the functioning of stock market and limited investment budget. Despite these barriers, the survey found that millennials are interested in alternative ways to invest, with 54% saying they would be interested in purchasing stock if it were as convenient as buying a gift card in a grocery store or other retailer that could be redeemed online.
It will be interesting to see if Stockpile's Gift Cards for Stock will become an attractive option for millenials and if they would be eager to try it. The gift card in itself is a great gift to teach someone about investing or experimenting in the stock market for the first time.
This is how it works – someone buys a gift card worth $50 of Facebook stock and gifts to another person. The cardholder can go online and create an account by entering basic information such as date of birth and Social Security number. They then have to type in a code from the card to redeem the stock. If Facebook closes that day at suppose $100 a share, the cardholder will own half a share of Facebook stock. They can see the performance of the stock through Stockpile's online interface. If the cardholder doesn’t want to own Facebook stock, they have the option to select the same denomination of stock from other 1,000 investments that Stockpile offers, including a market or gold index exchange traded funds (ETF).
If the cardholder does not want to have a stake in the market at all, they can trade it for a retailer gift card that functions like cash. The cardholder can also buy and sell stocks through the Stockpile interface for 99 cents per trade and they don’t have to pay anything for Stockpile to simply hold the investments.
Gift Cards for Stock presents a great example of how companies are coming up with innovative products in the prepaid card segment to target millennials. Millennials appreciate the convenience and security these financial cards offer and are ready to experiment with different product categories. PayNXT360 expects competition to further intensify in this segment and companies’ rate of innovation to increase.
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