Higher adoption of digital gift cards leads to new product launches in the retail and travel segments in 2023

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The growing preference for personalized shopping experiences and convenience, coupled with advancements in technology, has driven the popularity of digital gift cards over the last five years. The surge in adoption of digital gift cards has, therefore, paved the way for new digital gift card product launches globally. The trend is especially gaining momentum in the retail and travel sector due to the shift in consumer behavior.

• EML Payments, for instance, launched a digital gift card offering for shoppers in the United States and Canada. The payment solution, launched in May 2023, will enable shoppers to purchase the payment tool and get them instantly delivered for a seamless shopping experience.

In the United States, digital gift card has been growing in strong popularity ever since the pandemic outbreak. With its ability to drive sales and revenue, even merchants are seeking to provide such solutions to their customers. As a result, providers such as Zuza are launching innovative digital gift card programs in the United States.

The leading omnichannel software and super app, in March 2023, announced the launch of Prolific eGift. Notably, the program has been specifically designed to benefit merchants. The digital gift card program, for instance, enables merchants to create and sell gift cards to their customers. This, in turn, will lead to higher sales and revenue, as more consumers tend to shop from shoppers that offer gift cards.

To make the digital gift card offering more attractive for merchants and shoppers in the United States, Zuza entered into a collaboration with Apple and Google Wallet. The alliance will enable consumers to integrate their digital gift cards with Apple and Google Wallet, thus offering a seamless shopping experience.

In the United States, PayNXT360 expects more such innovative digital gift card program launches over the next few quarters. This trend will, therefore, keep aiding the growth of the United States gift card industry. According to PayNXT360’s estimates, the gift card market in the United States is expected to increase from US$185.4 billion in 2022 to reach US$247.9 billion by 2027.

Alongside the United States, the Canadian gift industry is also projected to record strong growth over the next five years. Between 2023 and 2027, the gift card market is poised to grow at a compound annual growth rate (CAGR) of 5.1%. At this rate, the industry will grow from US$6.7 billion in 2022 to reach US$8.8 billion by 2027, according to PayNXT360’s estimates.

Like the United States, the popularity of digital gift cards is also growing in Canada. EML Payments and Visa have also launched their digital gift card offerings for shoppers in the North American market. In addition to this, even travel-focused businesses are launching such offerings in Canada.

• Transat Distribution Canada (TDC), for instance, launched a new gift card program in May 2023. Named, zaluna, the gift cards are available for digital purchases exclusively. To launch the digital gift cards, the firm entered into a strategic collaboration with the gift card provider firm Givex.
• As part of the program, the firm is offering various gift cards including Marlin Travel, TravelPlus, Club Voyages, Transat Travel Club, and Voyages Transat. All of these digital gift card offerings are tailored specifically to the spending habits of travelers in Canada.

The fact that an increasing number of consumers try a business after receiving a gift card means that the digital gift card program launched by TDC has the potential to drive incremental revenue and sales for the firm. Going forward, PayNXT360 expects more travel-based businesses to leverage the popularity of digital gift cards worldwide, as they seek to tap into the growing trend of traveling after the pandemic outbreak.

Alongside travel-focused firms, government entities are also leveraging digital gift cards and vouchers to boost tourism in their respective territories. Taiwan, for instance, is offering digital smartcards stored with S$218 or vouchers worth the same value for hotel stays. The strategy to offer digital gift cards and vouchers is part of the country's strategy to restore the flow of foreign visitors to Taiwan.

• The country has announced to distribute 500,000 vouchers or digital smartcards as part of the initiative. A total of 250,000 vouchers will be disbursed in 2023, while 150,000 will be given in 2024, and the remaining 100,000 are left for 2025.

Such innovative programs launched by government entities are also expected to aid the popularity of digital gift cards from the short to medium-term perspective. Furthermore, such initiatives will also accelerate the growth of the global gift card industry over the next three to four years. Notably, the global gift card market is poised to grow at a compound annual growth rate (CAGR) of 6.9% from 2023 to 2027, increasing from US$472.7 billion in 2022 to reach US$668.4 billion by 2027, according to PayNXT360’s estimates.

To know more and gain deeper understanding of the global gift card market, click here.