Lost that gift card? $A4.5bn of them are online

Digital gifting is now a mainstream payment option.

In 2016 global digital-gift-card spending exceeded $US 62 billion and by 2024 the digital-gifting economy is estimated to be worth $US698 billion - with compound annual growth rate forecast at 10.8 per cent. 

The trend is evident in both emerging and developed economies:  India holds one of the strongest positions for future growth, with the market having reached $US 1 billion per annum. Meanwhile the United Kingdom is one of the biggest markets in Europe for with a growth rate of 10.2 per cent in 2016.

" Plastic gift cards are still a mainstream avenue but digital cards are increasingly in demand.” -Matt Hoggett

In Australia, the gift-card ecosystem totals $A4.5 billion. There are two sub categories: open-loop – typically Pre-Paid Visa, MasterCard or AMEX Cards - and closed-loop cards which are tied to a specific retailer.

Plastic gift cards are still a mainstream avenue but digital cards are increasingly in demand, particularly from younger audiences – the market like many others is becoming virtual.

While there are a number of digital-gift-card retailers emerging in the Australian marketplace, delivered by email and printed at home, when it comes to digital-gifting apps the local market is fairly immature.

In the US there are three primary contenders who have been in market for over two years and the market is growing.

There is great opportunity in this growing segment. It’s important to understand the target audience, what motivates people to buy and receive in this category, and why the segment is growing.

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Corporate sector

Digital-gifting customers range from individuals to small businesses managing annual corporate gifts to multinational corporations placing bulk orders for staff-reward programs and acquisition and retention strategies.

Corporate sector investment has been a major driver of growth in the digital gift-card market. Human-resource managers, sales managers and executives are looking for ways to meaningfully reward and incentivise outstanding work and nurture staff culture while marketing teams are looking to efficiently distribute prizes.

According to a recent study conducted by the Incentive Research Program staff prefer non-cash rewards including pre-paid travel and flexible store vouchers to avoid their wins and celebrations being absorbed into non luxury, household expenses.


Thanks to the proliferation and low cost of smart phones, consumers are embracing digital gifting and it has been largely driven by millennials as it fits their online and mobile-centric lifestyle.

Digital gifting has become necessary for this younger audience to make online purchases on platforms like iTunes, Kindle and for online gaming. With more than 444.9 million users worldwide accessing digital commerce from mobile phones, it’s an opportunity for all business but particularly small and medium-sized.

Research and survey incentives

According to the National Gift Card Group digital gift cards have proven to be an effective method to encourage survey participation—especially when they’re sent within moments of completion. 

Unsurprisingly, uptake of digital gift cards has grown in clinical and market research where recruiting suitable candidates for surveys and focus groups can be particularly expensive and labour intensive.

The traceable financial incentive has proven to increase response rates, and reduce the administrative workload of gift card fulfilment.


A recent study conducted by SCAR found 47 per cent of respondents would prefer to receive a gift card over an actual gift.

The study highlighted convenience as the major purchase motivator closely followed by: saving time, making others happy, finding a practical gift, and the most significant reason being gift givers are confident that the recipient will receive something that they like.

Predictably, the research identified the primary purchase of gift cards was dedicated birthdays and Christmas, closely followed by Father's Day and Mother's Day.

Benefits of going digital for SME

We see several attractions for SMEs in digital gifting: it is a discreet way to reward staff in a small business, without making a fuss or wasting time running to the shops at the last minute.

In 2016, many small businesses such as gyms and chain restaurants deployed digital gifts as part of in store competitions and promotions or as part of their acquisition and retention strategies.

Partnering with a digital gifting platform promises a more seamless purchase pathway for consumers and reduces the operational burden for merchants. The premium platforms offer customers real time balance checks, scheduled delivery, personalised messages and safe storage of the voucher on smartphone devices.

Obviously Prezzee is in the business of digital gifting but as the world of commerce goes increasingly online, we expect the pattern of physical gift-card take up to be replicated online.

Matt Hoggett is co-founder of Prezzee

Disclaimer: ANZ has worked with Prezzee in some marketing campaigns

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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