5 ways gift cards got big in the U.K.
The U.K. gift card market is expected to reach US$13.1 billion (about £10 billion) in transaction volume by 2020, up from US$8.6 billion (about £6.5 billion) in 2015 – a growth rate of over 8 percent each year, according a report from the payments market intelligence consultancy PayNXT360.
Closed loop gift cards, which can only be used at the merchant that issued the card, comprise of the bulk of the U.K. market, according to PayNXT360. However, increased consumer desire to use gift cards multiple outlets – across high street retailers and online merchants such as Amazon, is leading to significant growth in open loop cards.
In contrast, the U.K. remains firmly in the physical gift card camp, particularly among buyers. According to the First Data U.K. 2018 Prepaid Consumer Insight Study of 1,032 adults aged 18+, purchasers of gift cards preferred buying physical cards over digital ones at a rate of more than three to one (62 percent vs. 18 percent). It may just be personal choice or it could be as simple as physical cards lend themselves better to being inserted into a birthday card envelope.
Interestingly enough, when it came to the preference of receiving a gift card, the gap between physical and digital card preferences shrank considerably – 44 percent and 27 percent respectively. The nature of digital cards allows them to be sent and spent instantly and they also make purchasing with the card more convenient.