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Virtual Cards Will Help Boost Gift Card Sales, Says National Retail Federation

Mercator Advisory Group by Mercator Advisory Group
November 15, 2012
in Analysts Coverage
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E-mail and mobile cards will help increase gift card sales this holiday season based because more shoppers are aware of them and more retailers are enabling in store redemption than ever before, according to an article in Forbes.

Virtual gift cards — sent online or from a smartphone — are breathing new life into the gift-card business, which is expected to soar this holiday season, according to the National Retail Federation.

As retailers and credit-card issuers create fresh ways for gift cards to be personalized and delivered, shoppers plan to spend more than they ever have on these no-fuss presents.

The article notes Target has made it possible for customers to buy virtual gift cards in stores by scanning a QR code on gift card displays. This will be a test of the perception of virtual cards as a gift versus plastic cards. It will be interesting to see whether Target will release any information on the sales of plastic versus virtual gifts. It could provide an interesting insight into the acceptance of virtual cards.

Additionally, the Forbes report notes that the National Retail Federation predicts holiday spending on gift cards will reach roughly $29.8 billion. This is based on a consumer survey. Mercator’s estimate is significantly higher, based on data gathered from retailers about their holiday sales last year. We estimate that the total holiday load on virtual cards will be roughly $43.2 billion. While Mercator’s forecast estimates that only about $330 million this will be loaded onto virtual cards, the Target development and increased use of virtual cards may prove this forecast to be overly conservative.

Click here to read more from Forbes. Click here to download Mercator Advisory Group’s gift card forecast.

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