First Data

America has a culture of gift giving, and gift cards are one of the most preferred gifts to give as well as receive. Three-quarters of U.S. consumers purchased gift cards last year, averaging five gift cards purchased during the year. It’s no surprise that birthdays and Christmas are the top two gift giving occasions, but gift card purchases have extended beyond the traditional occasions. Now, 20% of consumers who purchased gift cards gave one for “no special occasion.”

Research has shown that gift cards are not only a substitute for a regular gift, but many consumers perceive them as a more valuable gift. For example, a gift card with a value of $25 is seen as equal to a traditional gift worth $50. Receivers of gift cards enjoy the flexibility of being able to select their own gift. Nearly half of the consumers who receive gift cards like to splurge and buy something special with their gift card.

Traditional, plastic gift cards have been around for nearly two decades, with the first gift card being introduced by Blockbuster in 1994. Since then, gift cards have undergone many changes, including the ability to reuse a gift card by loading it with additional funds. First Data has recently introduced an electronic gift card product called eGift Social. With eGift Social, egifts can be purchased online and sent to the recipient by email or on Facebook, and can be redeemed in person at a retail location or online.

While still relatively new, nearly 20% of consumers purchased or received an egift card in 2011, an increase of 50% over 2010. As more retailers and restaurants decide to offer egift cards, we expect this growth trend to continue. Once consumers experience the benefits of egift cards, they will likely continue to use them. Unlike traditional plastic gift cards, egift cards can be sent and received immediately as well as stored on a mobile phone—no more issues with forgetting or losing the plastic card. eGift cards are the next generation of gift giving.

You can read more about First Data’s research findings in Consumers Insights into the U.S. Gift Card Market: 2011 and The Face of Gift Card Consumers: Meeting the Needs of Five Consumer Segments.

Sharon Brant is First Data’s Director of Market Intelligence.