Technology and product development are driving investment from gift card providers in 2023

 


In value terms, the gift card market in Global has recorded a CAGR of 8.0% during 2018–2022. According to PayNXT360, global gift card industry is expected to grow by 8.1% on annual basis to reach US$ 511019.3 million in 2023.

The gift card industry at the global level will continue to grow over the forecast period and is expected to record a CAGR of 6.9% during 2023-2027. Global Gift card market will increase from US$ 472764.8 million in 2022 to reach US$ 668465.5 million by 2027.

The popularity of gift cards as a gifting option and payment tool has grown significantly over the last five years. The global pandemic outbreak has further accelerated the shift towards gift cards, especially digital ones.

The current macroeconomic challenges, including high-interest rates and an inflation environment, are further aiding the adoption of gift cards among consumers globally. As the trend is projected to continue from the short to medium-term perspective, gift card providers are investing hundreds of millions of dollars in improving their technology and developing new products to bolster their competitiveness.

·         In March 2023, Octopus Holdings, the Hong Kong-based digital payment platform, announced that the firm is planning to spend millions of dollars on technology and the development of new products. The increased investment in the space is part of the firm's strategy to further boost its competitiveness.

·         From the short to medium-term perspective, the firm is also planning to double its investments in consumption voucher offers and marketing efforts for the government scheme in Hong Kong.

Notably, the Hong Kong government launched the consumption voucher scheme back in 2021, wherein each eligible resident is handed out e-coupons worth HK$5,000. In 2022, the government double the amount to HK$10,000 to boost consumer consumption and support local businesses. In 2023, the government again announced the scheme, wherein e-vouchers worth HK$5,000 will be given to 6.4 million eligible people in two installments. 

For this newest round of the consumption voucher scheme, Octopus Holdings announced that it would spend tens of millions of dollars on offers and marketing efforts. The spending on the project comes amid the growing competitiveness in the space in Hong Kong.

·         Octopus Holdings, for instance, is one of the six service providers chosen by the government for the consumption vouchers scheme. BoC Pay from Bank of China, PayMe for HSBC, AlipayHK, Tap & Go, and WeChat Pay HK, are among the others that are involved with the consumption voucher scheme.

Amid the fierce competition in the space, involving the consumption voucher scheme announced by the government, Octopus Holdings has revealed that the firm had been competitive in the last two rounds. For the government program, the firm adopted a three-pronged approach. This included the use of physical cards, online payment service, and mobile app, thereby allowing the firm to cater to the needs of different customers in Hong Kong.

Read More - Firms are forging strategic alliances to launch crypto-linked gift cards and expand the distribution network in 2023

Read More - Economic challenges provide a growth impetus to the gift card market in the United Kingdom

The firm, in March 2023, revealed that there were more than 20 million cards in circulation as of September 2022. Furthermore, the firm announced that 15 million transactions are completed using the cards every day in Hong Kong. This shows that the e-voucher scheme announced by the government has been a major revenue driver for Octopus Holdings. With the firm planning to invest tens of millions of dollars toward the 2023 e-voucher program, PayNXT360 expects further revenue growth for Octopus Holdings over the next few quarters in Hong Kong.

Other payment services, such as cross-border options, have also added to the revenue growth of the firm. Launched in January 2022, the Octopus UnionPay cross-border payment services offered by the firm have experienced a five-fold increase, since travel activities resumed between mainland China and Hong Kong. From the short to medium-term perspective, the firm is also planning to expand the availability of its cross-border payment solution in the Greater Bay Area.

Alongside Octopus Holdings, a few other gift card providers have been also investing in their technology and product enhancement. Blackhawk Network, for instance, had collaborated with Tata Consultancy Services to transform customer engagement and global gift card operations.

·         For Blackhawk Network, Tata Consultancy Services (TCS) has enabled process standardization and business transformation. This has allowed the global gift card provider to unify its operations worldwide, to offer customers and merchant partners a seamless operation.

Customer experience and engagement has emerged as a critical factor in driving the adoption of payment solutions worldwide. Consequently, PayNXT360 expects more gift card providers to enter into such strategic collaborations in the global market from the short to medium-term perspective. These alliances and strategic partnerships will, therefore, aid the competitive landscape in the fast-growing business vertical.

Alongside growing investment in technology and product development, the growing competitive landscape in the gift card market will also force providers to focus on other strategies, such as expanding their distribution network. Although the adoption of the digital gift card is growing worldwide, physical alternatives also remain a popular choice among consumers. Consequently, providers are expected to expand their in-store offerings in the global market.

·         In April 2023, Géant, a chain of supermarkets and hypermarkets that are a part of French retailer Groupe Casino, announced that the firm is launching its gift card solution across all of its stores in the United Arab Emirates. In addition to this, shoppers can also purchase gift cards at the Géant dedicated gift card portal. The gift card solution has been made available in both formats, physical and digital, allowing shoppers to use the payment tool for purchases at all of its supermarkets and hypermarkets.

The United Arab Emirates gift card space is increasingly becoming competitive, as more and more providers are expanding their footprint in the country amid the growing adoption of the payment method. Pine Labs, one of the leading gift card and prepaid card providers in the Asia Pacific region, has also expanded its footprint in the Emirati nation in 2023.

Read More - Pine Labs reports strong revenue growth under its gift card business vertical

All of these factors, including investment in technology and product development, strategic collaborations to boost customer engagement, and expanding distribution network, are expected to keep aiding the growth of the global gift card market over the next three to four years.

 


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