Paper or Plastic: 15 Hot Gift Card Trends for 2010

Both women and men said they wanted gift cards more than any other gift for Christmas, which explains why experts anticipated the little plastic cards would be the number-one present for the sixth consecutive year, with 64 percent of consumers saying they'll give or receive them. Yet many consumers fail to cash in their cards, creating a windfall for many merchants. How gift cards are used, not used and expected to change make for some anticipating trends in this growing industry.

Here are the 15 hottest gift-card trends of 2010.

HOW GIFT CARDS ARE USED

1. While consumers are purchasing more gift cards, for a total of nearly $80 billion a year, the average value of cards is down by $6 to $46.

2. Nearly one-third of consumers are redeeming gift cards for necessities, as opposed to discretionary items.

3. Many state and national parks now offer gift cards you can purchase online and use for campground fees, accommodations in lodges, concessions or park admission.

4. Most customers who use gift cards spend some of their own money to buy merchandise that is more expensive than the value of the card.

5. Gift cards for the upscale department stores Saks Fifth Avenue and Neiman Marcus are redeemed faster than big-box store cards.

6. Gift cards are moving into health care. Two prepaid companies (Wired Benefits and InComm) are collaborating to establish a "medical services" gift card through Visa,  which consumers can redeem for services across some of the nation`s largest health networks.

7. In 2008, more merchants than ever before included a free gift card with the purchase of merchandise or a gift card.

FUTURE OF GIFT CARDS

8. Merchants are moving towards more inventive forms of gift cards containing computer chips, such as key chains, lapel pins and stickers.

9. Smart-phone applications are soon expected to electronically deliver and receive loyalty program and gift-card information combined, creating a virtual wallet.

10. Fast-food and sit-down restaurant cards are used most rapidly.

11. The forthcoming Credit Card Accountability, Responsibility and Disclosure (CARD) act will impose some restrictions beginning in  Aug. 2010 to make gift cards more consumer friendly (e.g., cards cannot expire for 5 years, dormancy fees for unused cards can only be charged if cards have been inactive for 12 months, and all fees must be fully disclosed at the time of purchase).

UNUSED CARDS

12. An estimated 10 percent of cards are not redeemed, amounting to a gain for U.S. merchants of about $8 billion in 2006.

13. Home Depot and Best Buy each recently added about $43 million in unused cards to their bottom line.

14. People most commonly didn't spend their gift cards because they didn't have time to shop (58 percent) or couldn't find anything to buy (35 percent).

15. Some cash-strapped state governments are forcing gift-card issuers to turn the unused balance over to the state.

SOURCES:
24th Annual Holiday Survey conducted by Deloitte, an international accounting and consulting firm
Hartman Group and National Research Network Report
2009 Archstone Consulting Trend Report
Transaction processor First Data Corp. 2009 study
Archstone Consulting Survey
Hartman Group Survey of 2008
Economist Joel Waldfoge
Financial-Services Research Firm TowerGroup

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