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Table of Contents

Lead Story

The payments sphere 2009:
Looking back, looking up

News

Industry Update

Radiant, Computer World in the lawsuit soup

Mobile payments at a crossroads

Tweaking interchange down under

NEAA preview

Features

GS Advisory Board:
The best moves of 2009 - Part II

The payments industry numbers game:
Volume over price

Research Rundown

Selling Prepaid

Prepaid in brief

Mercator of good cheer about gift cards

Unbanked + underbanked Americans top 60 million

Patti Murphy
The Takoma Group

Signs of the future

Views

Reaching the unbanked

Patti Murphy
The Takoma Group

Should you buy stock in a terminal manufacturer?

Brandes Elitch
CrossCheck Inc.

Education

Street SmartsSM:
Time management for 2010

Jon Perry and Vanessa Lang
888QuikRate.com

Fighting the payment squeeze:
Alternatives retailers may consider

Pat Morgan
Total System Services Inc.

Fees you can't ignore

Ken Musante
Moneris Solutions

Managing conflict in the workplace

Vicki M. Daughdrill
Small Business Resources LLC

Defining global processing

Caroline Hometh
Payvision

POS Horoscope 2010

Dale S. Laszig
DSL Direct LLC

Company Profile

Litle & Co.

New Products

Slip-on terminal mobility

PAYware Mobile
VeriFone

Front-end tokenization

SafeDebit
NYCE Payments Network LLC

Inspiration

Be the sale

Departments

Forum

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

December 28, 2009  •  Issue 09:12:02

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SP
Mercator of good cheer about gift cards

In a December 2009 research note, Mercator Advisory Group voices optimism about overall gift card growth in the current holiday shopping season. Unlike last year at this time, when both open- and closed-loop gift cards suffered a slowdown in their growth rates, Holiday 2009 looks particularly rosy for the gift-giving staple, according to the Boston-based consultancy.

In the note entitled 2009 Holiday Gift Card Sales Prediction: Things Don't Look So Bad From Here, Brent Watters, Senior Analyst at Mercator, estimates that the total load volume for closed-loop, private-label gift cards in the fourth quarter of 2009 will increase by 1.9 percent over the same time last year; given the same parameters, money loaded onto open-loop, network-branded gift cards could increase by as much as 50 percent.

'Tis the reason

Based on various data sources, including Mercator's own benchmark study, Watters said the open-loop gift card market grew by 54 percent in 2008, with a load volume of $7.8 billion. That number is expected to rise to $11.8 billion by the end of 2009, representing a 50 percent increase over the previous year.

Watters estimates that 60 percent of all money loaded onto gift cards annually happens in the fourth quarter of the year, "with the highest level of loads occurring days before Christmas as inventories run low and consumers make last-minute decisions on holiday gift giving."

With more retailers minimizing inventories, it is likely "there will be more out-of-stock situations earlier this season and reduced category choice, making gift cards well-positioned as a viable alternative to sold-out, targeted merchandise," Watters said.

Spirited gifting

More cause for optimism occurred on the Monday following Thanksgiving, referred to as "Cyber Monday," when online spending is considered highest.

Mercator quoted ComScore Inc. and other research firms that said online purchasing reached $887 on that day this year, a 5 percent increase from the Cyber Monday of 2008.

"This is good news for prepaid issuers that leverage the online channel, which has been providing gift cards with significant traction," Watters said.

Given that growth in gift card sales is directly related to consumers opting to buy prepaid cards rather than use cash and checks to buy more traditional gifts, the upward trend in gift card purchasing may reflect that holiday shoppers are in a more positive frame of mind this year as opposed to last, Watters said.


For more stories from SellingPrepaid E-Magazine, as well as breaking news and forums devoted to the prepaid sphere, please visit SellingPrePaid.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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