Closed Loop Predictions 2013

Gift Cards as Digital Currency

Gift card spending is expected to reach $28.8 billion this year. The National Retail Federation reports that 81.1 percent of those in the survey plan to purchase at least one gift card, with an average spending of $156.86 on gift cards, the highest amount in the survey’s 10-year history. The survey, conducted by BIGinsight, also finds that roughly 60 percent of people would like to receive a gift card.

Gift cards continue to be a sweet spot in the prepaid market with billions of dollars being loaded onto gift cards sold in US stores. Virtual gift cards purchased through the internet will further increase consumer adoption.

David Stone, CEO, CashStar

Digital gifting growth will accelerate in 2013. We are seeing growth in the several hundred percentage range, while plastic is in the single digit range. We are moving to a fundamentally digital economy which is driving digital gifting.

Big established players are trying to figure out how to get into the digital game. Big third party plastic distributors are going to be more assertive as they realize the importance of digital. They will seek to play catch up and/or acquire digital innovators.

The prepaid closed loop product is being used as alternative currency more and more in place of coupons, and as a means to burn rewards points. Innovative retailers are using closed loop digital currency as a promotional vehicle. Starbucks is the poster child for the new kind of innovation and teamed up with Living Social to run the largest gift card/online voucher program every: 1.5mm eGifts in a 24-hour period. It even made the Guinness Book of World Records (this was powered by CashStar, who because of its technology platform and scale, was equipped to support the program).