GCVA: How Gift Cards Provide the Cashless Society Model
Gift cards have evolved as a reliable digital payment method and have become particularly popular as the cashless currency of choice amid the pandemic, facilitating things such as free school meals, volunteer purchases and gifts during people were separated.
Gail Cohen is the general manager of the Association of gift cards and vouchers (GCVA) – a role she has held since 2015. The organization has grown exponentially over this time and now has approximately 95 active members, including major retailers and service providers.
Cohen’s role is to lead the association by developing strategy and setting direction with the executive group, ensuring it represents its members and the industry in all key areas, including: public relations and the media to raise the sector’s profile and value to key decision makers, consumers and stakeholders; liaison and advocacy with government, law commission and other key partners; introducing new services to support members and add value to consumers; to provide opportunities for discussion, debate and networking, and to provide information, research and up-to-date information and news. Cohen also leads member event meetings and the GCVA annual conference.
Cohen works closely with the industry in the UK, Europe, USA and internationally, and with GCVA members, to continually improve, develop and expand the services, offering and benefits for members and the industry at large.
She sat down with The Fintech Times to discuss how gift cards are paving the way for cashless payments more broadly, as well as providing examples of how this is happening:
With eye-catching innovations, breakthrough technologies, and even new digital currencies catching everyone’s attention as the future of Fintech, the vital role played by gift cards has gone largely unnoticed by many observers.
However, with the rapid shift to cashless payments (in just five years cash has gone from over 50% to just 17% of all payments) many have turned to this proven solution to meet the urgent demand for alternative payment methods.
Secure, simple and (increasingly) transparent, the modest gift card offers a ready-made solution. Add to these advantages digital innovation in the sector and the overheating effects of confinement. The term “gift card” now massively underestimates the role this sector plays in modern transactions.
Here, we’ll look at how gift cards are contributing to our cashless society, looking at the increased use of gift cards as a method of payment throughout the pandemic, how adding them to mobile wallets benefits both consumers and to retailers and the ways they help people control their spending as the cost of living rises.
The rapid digitization of gift cards thanks to containment
The covid-19 pandemic has further accelerated moves towards the cashless society and the growth of gift cards as digital currency. Year-over-year, sales of online gift cards and eVouchers jumped by 117 percent during the second half of 2020, due to restrictions that made donations and physical purchases more difficult. As restrictions eased, 27.5% of gift card buyers said their conversion to digital gift cards was permanent. This has converted the industry into one that is now digitally driven, sparking a new wave of innovation that is taking gift cards beyond their traditional core.
One of these expansions was their use by community volunteers. During social distancing and stay-at-home restrictions, the ability to transfer money through secure and flexible means has become crucial. This was especially true for volunteers who supported vulnerable people by doing their weekly shopping or collecting basic necessities.
Pre-loading a gift card with funds gave people an instant way to provide a method of payment to these volunteers, without having to share bank cards or payment details.
Gift cards have also played a crucial role in employee benefits, supporting key workers or helping those in need. They have become the means for communities to purchase meals for nurses or reimburse school meal allowances.
Gift cards have also expanded their role in home entertainment and gaming. Gift cards allowed users to make in-game purchases or media subscriptions securely. Consequently, the purchase of gift cards for personal use has continued to grow in popularity, with 7.7% of monthly gift card buyers buying gift cards for themselves in 2021.
Gift cards for mobile payments and customer relations
Lockdown-enforced innovations mean many gift card providers have added digital options to their products and services. This means that many gift card providers now offer an “add to wallet” feature, placing their gift card on phones or other devices.
This has transformed the relationship with gift card operators and their customers. For example, push notifications reminding a customer that they have a gift card balance to spend. Additionally, retailers have the ability to send details of offers and promotions to gift card holders.
This is especially valuable given the amount of additional expense consumers add to gift card purchases. Also, how often gift cards encourage shoppers to switch to new products and brands that they may not have tried before. This is reinforced by our latest state of the nation research, which found that more than half of all UK shoppers discovered a new brand or organization through a gift card they received.
Gift cards for budget control
Gift cards are also a key strategy for consumers who want to control their budget or that of their children. With inflation rising and the cost of living rising, people are increasingly looking to budget more conservatively and measure their spending. For example, people now buy gift cards for a supermarket to set a spending limit. With rising energy bills, gift cards are being talked about as a way to help people pay their bills, through a family contribution or as a way to distribute government grants.
Anyone who’s been caught off guard by kids making in-game purchases will also recognize how gift cards protect bank accounts from being “looted” by overly enthusiastic Fortnite fans.
Create a community “currency”
Additionally, beyond the examples described here, there are many other emerging ways to use gift cards as a method of payment for retailers and consumers. For example, the adoption of gift cards by local stores to create a form of “currency” that helps support high streets and local businesses.
All in all, it’s time to think of gift cards no longer as just a method of giving, and more of a payment method and a fintech solution that facilitates innovation in our cashless society. It’s clear that gift cards are likely to play an even bigger role in the future, providing a convenient and secure method of payment. A platform people trust, understand and easily access.