M&A activity in gift card industry expected to increase in the coming quarters

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The gift card industry is undergoing a wave of transformation with a series of M&A activities across the gift card value chain over the past few years. Consolidation in the gift card market is expected to continue in the coming quarters as players look to strengthen their market position.

Driving this trend is the steady growth posted by gift card industry with improved margins, driven by increased adoption of digital gift cards. Interestingly, digital cards are being adopted across age groups and not just completely dependent on millennials and Gen Z. Across the B2C and B2B markets, gift cards are being used as a tool for customer engagement and retention, to boost sales as well as for luring new customers.

In January 2021, JP Morgan Chase announced to acquire cxLoyalty Group Holdings’ credit card rewards business. It will also acquire cxLoyalty’s technology platforms, travel agency, gift card, and points divisions. The acquisition will enable Chase to offer more rewards to Ultimate Rewards Credit Card Holders.

In November 2020, National Gift Card, a North American based prepaid tech and card company, was acquired by Blackhawk Network. This is expected to strengthen Blackhawk’s position in gift card and prepaid card market and give it access to National Gift Card’s fulfillment capabilities. The deal is expected to further improve the company’s incentive solutions as well as its end-to-end program management solutions.

Earlier in July 2020, Paysafe, a payment platform, acquired Openbucks, a US based payment technology company which allows customers to pay online via gift cards. This move strengthened Paysafe’s cash alternative payment offering in the US.

Similarly in April 2020, Blackhawk Network purchased SVM Cards, a physical and digital open- and closed-loop prepaid cards provider, to further expand its presence in prepaid and B2B gift card offerings.

Other notable acquisitions include InComm Payments, payment solution provider’s acquisition of Todo Cartoes, a closed-loop gift card processor based in Brazil, in November 2020. This is expected to strengthen InComm’s presence in Brazil by facilitating processing and distribution of closed-loop gift cards.

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