The Green Sheet Online Edition
April 08, 2013 • Issue 13:04:01
The rise of e-money
The National Retail Federation expects nationwide gift card sales to top more than $28.79 billion in sales in 2013, with $8 billion of the sales originating through the already thriving mobile and virtual gift card channels. With the proliferation of smart phones, the wallet-placeholder status of plastic gift cards is being replaced. Through virtual gift cards, consumers can send and spend gifts from their cell phones via an app, email, text or even social media - revolutionizing the way consumers send gifts and spend money.
There are tangible benefits to virtual gift cards over traditional ones, most notably the ability to avert monthly and dormancy fees. Stores now send friendly email reminders to gift-card holders to notify them of card balances and usage. Additionally, the intimate quality of the customer experience a virtual gift card provides creates a more compelling brand environment for the recipient, enabling a unique, multimedia opportunity to redeem the card's value. Open- or closed-loop virtual gift cards are continuing to proliferate in marketplaces ranging from restaurants, department stores, eBay Inc. and just about anywhere else, thanks to prepaid virtual gift cards branded, for example, by Visa Inc.
E-gifting of virtual gift cards has opened up doors for merchants by leveraging data analytics to target marketing programs based on consumers' buying trends and habits. Retail chains and stores are developing and deploying loyalty programs tailored to support customers as they shop online. The ability to provide consumers personalized, rapid customer service will attract new customers and cause repeat customers to continue visiting the business.
The future of gift cards is now
Electronic gift-giving companies have penetrated the consumer landscape by inventing apps that allow users to quickly send and receive virtual gifts. Throughout 2013, the industry will continue to see the emergence of business-to-business companies taking advantage of the growing virtual gift card trend. Payment processing companies capable of sending money from the giver's bank account to the recipient's are popping up to meet the demands of virtual-gift giving consumers. Location-based virtual gifting allows consumers to send any kind of gift, at any location, without going through a merchant. Gift-giving apps process givers' requests by using a payment processing platform to quickly and conveniently transfer funds from one account to another.
The simplicity of sending a friend a beer at a local pub through a location-based app paves the way for a sense of community, and a gift that will actually be consumed. According to TowerGroup, virtual gift cards are forecasted to reach $11 billion in sales by 2014, with no sign of the annual revenue depreciating. Companies with payment processing technologies that allow for quick, simple fund transfers are fueling this trend's ascendancy. They are the driving force of funds and management behind e-gifting platforms - and will procure the most benefits, continuing the trend for years to come.
Dave Wilkes is founder and CEO of Salt Lake City, Utah-based Fuze Network, a payment technology company that "fuzes" together existing payment networks, providing clients with the ability to send money to any bankcard. He can be reached at firstname.lastname@example.org or at 888-389-3832.
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