Presenting gifts on various occasions is an old trend prevalent in various cultures worldwide. However, with the acceleration of digital transformation in recent times, gifting behavior and preferences have drastically changed. The traditional way of physical gifting is now being replaced by modern options such as gift cards, e-cards, etc.
A gift card is a prepaid debit card that is loaded with a certain amount and can be used to conduct transactions. Merchants or banks often issue gift cards and incentive cards. Besides gifting, they are frequently used as a marketing strategy by retailers and e-commerce companies to promote their brands, attract new customers, increase brand recognition, reduce fraud, and increase sales. Gift cards can either be physical or digital and can be used to make purchases. With the rising internet penetration, gift cards in their digital form have created a brand-new paradigm for consumer rewards and personalized gifts. They are rapidly integrating with the multitude of gifting and rewarding occasions to become mainstream methods for gifting. The younger generation is a forerunner in adopting gifting card culture. According to a recent study by Qwikcilver, over 70% of the respondents had purchased a gift card for gifting at least once. Around 85% of these buyers were less than 35 years of age.
The United States owns the largest gift card market , the cards being used extensively during the holiday season. Nonetheless, gift card culture is mainstream in any economy with frequent gifting traditions. According to a recent study by Mordor Intelligence, titled Middle East Gift Card and Incentive Card Market, the Middle East gift card and incentive card market was valued at USD 14.21 billion in 2022. It is expected to reach USD 45.05 billion by 2028, registering a CAGR of 21.2% during the forecast period. The report further mentions that while the pandemic accelerated the cashless payment system in the region, the rise in internet and smartphone penetration and the diversified retail landscape, ranging from high-end brands to mass retail brands and the developing fintech landscape in the Middle East region, were the major drivers for the market.
The digital format of gift cards, or the ‘e-gift’ cards, is rapidly rising and dominating the gift card sector. From a meager (<1%) contribution in 2012-13, digital e-gift cards have come a long way. Today, they hold over 95% contribution in terms of value. There are various reasons for this meteoric rise of digital gift cards. First, digitization across various sectors, including the rise of e-commerce, is helping e-gift cards to grow. Similarly, internet penetration and the proliferation of smartphones and tablets have led to the rapid adoption of e-gift cards in the retail sector. Another crucial factor driving the adoption of digital gift cards is the flexibility and convenience that e-gift cards offer in a rapidly evolving, fast-paced lifestyle. Today, with every individual immersed in a busy lifestyle, last-minute gift hunting is quite the norm. Moreover, rapid urbanization and the increasing disposable incomes of millennials, driven by their hectic lifestyles, are increasing the demand for convenient, flexible, instantaneous, and easily usable e-gift solutions.
Digital gift card Adoption is further boosted by the corporate sector. Corporate users are the largest users of digital e-gift cards across the region. Initially used to incentivize their employees, corporations now use gift cards for various objectives, such as maintaining good employee relations, managing customer relations, and maintaining supplier relations. Another driver for the market includes the rise of third-party gift card stores and online resellers that offer e-gift cards as a part of their merchandise. They have made gift cards available at the consumer’s fingertips. Platforms such as Amazon have made gift cards the default choice for gifting. It is trendy among consumers due to various add-ons and offers.
To sum up, the substantial rise of e-gift cards can be attributed to various reasons. The rising internet penetration, along with the increased involvement of consumers in e-commerce transactions, is one of the reasons for the rise in e-gift cards. Similarly, the flexibility and convenience it offers the young generation with a fast-paced lifestyle can be cited as another reason. Further adoption of e-gift cards by the corporate sector for managing their employees, suppliers, and customers is also driving the adoption of e-gift cards. Similarly, unlike traditional gifting, e-gift cards have innovative features such as group and delayed and scheduled gifting. These features, along with the flexibility and convenience associated with e-cards, have changed consumers' gifting behavior, which is only expected to expand in the future.
