E-wallets have changed the ways consumers pay at brick and mortar shops, but they’ve also created a digital space for E-gift cards. While the E-wallet was a technology viewed with more than a little skepticism by many consumers, over the last year and a half it’s been embraced, as the security that protects the technology has lived up to severe scrutiny. The E-gift card has been given a boost due to this consumer development. But how do E-gift cards stack up against their physical competitors? Here’s a look at how these digital gifts will dominate the holiday season.
Millennials love gift cards, and millennials are the largest generation in human history. Not only is the millennial generation the largest one, but it’s also the most connected, digitally. It comes as no surprise that E-gift cards are popular among millennials as many of their purchases are made online, whether for clothes, video games, movies, etc. As smartphones and tablets are a large part of millennials’ lives, the E-gift card fits their lifestyles, with an easily accessible and manageable place to keep their digital gift. Bankrate found that millennials between the age of 18 and 29 lost 40 percent of physical gift cards. It is no surprise that the digital alternative is preferable to this generation.
However, millennials don’t have a monopoly on E-gift cards. Giftcards.com, the largest online retailer of gift cards, conducted a study on the market share E-gift cards made up and their market share growth. In 2014 E-gift cards made up about 8 percent of their overall gift card sales. In 2015 that number more than doubled, for an average of more than 20 percent. While the jury is still out on what the hard data 2016 will reveal on the E-gift card, there’s no doubt that this form of digital gift is on the rise and will continue to gain and even outperform its physical counterpart.
The most obvious advantage for the consumer when it comes to E-gift cards is the simplicity with which they are stored on a phone with an E-wallet. Of course, a smartphone or mobile device is not necessarily essential for E-gift cards. They can also be printed out and used at a store or plugged into the coupon option of online retailers. One advantage of E-gift cards is the monitoring of younger spenders. While many people might feel as though cash is a better gift, a gift card in any form will prompt a purchase of an item the recipient may have wanted, but would not spend physical cash on when other expenses are pressing. For instance, an outdoorsman may be in need of a new tent, or a gamer may not splash the cash for a new and highly-anticipated title but hope that it drops in price. Cash would go to bills or groceries, while a gift lets him treat himself.
The main drawback to gift cards, digital or physical, is the small remaining balance that sometimes is left on the card after a purchase is made. While this drawback is mitigated somewhat with E-gift cards, as the customer can store that left over balance on their mobile device and use it next time they make a purchase, there is still a risk that the full worth of the gift card will not be redeemed.