Savvy, the leading gift card processing solutions expert, is calling for standardisation of the gift card industry with up-to-date technology that better protects consumers and meets their changing needs.
In its new whitepaper, Is standardisation of the gift card industry required?, Savvy argues standardisation is required to better manage consumer expectations. Consumers should know exactly what to expect from a gift card, it says. That means knowing that a card can be used in-store or online and that it can be stored securely in their mobile wallets for quick and easy access.
To drive this seamless customer experience across the industry, Savvy urges retailers to leave legacy gift card management systems behind and embrace modern technology.
Standardisation will help drive growth in a market that is already thriving, Savvy reports.
The global gift cards market was valued at $835.2 billion in 2022, and is projected to reach $4.2 trillion by 2032, growing at a CAGR of 17.7% from 2023 to 2032.
New research from the GCVA, meanwhile, estimates that the UK Gift Cards market was worth just under £7bn in 2019 and GlobalData forecasts that the market is set to grow 24.7% over 2019–25, with the total value of the market hitting £8.71bn by 2025.
Driving forces for standardisation
According to Savvy’s whitepaper, there are a number of driving forces for standardisation, as well as multiple challenges. However, the company advises the industry to look at standardisation success stories for inspiration and provides a wider industry perspective on what its implementation would mean for consumers. Savvy concludes with ‘a call to action’ and a glimpse of how the industry could look in future.
Savvy pinpoints four driving forces for standardisation. Firstly, it improves consumer protection so that buyers can feel assured that gift card stakeholders are holding themselves to account and there is a consistent user experience. Standardisation will also help improve transparency regrading issues such as fees and expiry dates. Further, it will help to reduce fraud and criminals taking advantage of out of date tech. Stronger processing technology can better tackle fraud, protecting both brands and consumers.
“In countries where there is standardised accounting and consumer protections and legal frameworks around gift cards, those countries tend to have the most successful and advanced gift card sectors,” says Jonathan Grey, founder and CEO of Ovation Incentives, which uses gift cards as an incentive mechanism for employee and customer reward programmes, mainly for international business.
Two, standardisation would increase convenience and add value. Consumers are already familiar with modern, contactless payment systems and expect the same friction-free experiences in all their retail interactions. However, tech in the gift card industry has stagnated, especially in-store. Going forward, technology should be intuitive and easy to use otherwise it will risk alienating customers.
Three, standardisation would drive growth by improving quality and adding value for customers, retailers and other stakeholders due to increased operational efficiencies, greater unity and risk reduction.
Four, standardisation would enhance interoperability and make it easy for operators to move between vendors and upgrade their gift card systems. It would strip out the need for bespoke interfaces and messaging, aid integration and reduce costs.
Standardisation success stories
If the gift card industry is looking for a road map to standardisation, it should look to contactless payments and cross-channel interactions, Savvy says.
The total value of all contactless payments jumped 49.7% in 2022, as Brits embraced the £100 transaction limit and returned to high street shopping following the easing of all coronavirus restrictions, data from Barclays shows.
The company, which sees nearly half of the nation’s debit and credit card spending, found a record 91.2% of all eligible card transactions were made using contactless payments last year – a sign that consumers and businesses are continuing to shift to next-generation technology when buying and selling.
There was also rapid growth in the value of mobile wallet contactless payments over the £100 card limit. These payments accounted for 4.1% of the total value of all contactless transactions last year, compared to 3% the previous year.
But the gift card sector lags behind in terms of tech with physical cards still required in retail environments or even print outs of digital gift cards. Most of all, consumers want consistency across their gift card experiences and they want spending to be simple and easy to understand.
“Customers increasingly expect the standards set in their day to day payments to also work for any other payment type, including gift cards,” says Brian Dunne at Giftcard Consulting.
Standardisation in the gift card industry would be a collaborative endeavour between all stakeholders, Savvy reports. The framework would need to build in flexibility and scope for innovation, the company adds. It would also require regular monitoring to ensure it meets customers’ needs.
Savvy suggests standardisation guidelines would cover five key areas of gift card management and use. These span the card design and features ie placement of the card number, expiry date and security code; legal requirements such as consumer protection laws and data privacy; technical specifications ie encryption and compatibility with PoS systems and mobile devices; issuer requirements ie procedures for activation, deactivation and replacement plus customer comms and consumer protection ie disclosure of fees, Ts&Cs and protection against fraud, theft and loss.
Challenges
Standardisation will not be without challenges, however. Savvy accepts there could be resistance to change in the gift card industry and that operators may have other more pressing business priorities. Cost could be another obstacle to adoption but could be overcome by showcasing the value standardisation will unlock. Fears that standardisation may stifle innovation and competition could be further barriers, Savvy adds. Savvy concedes standardisation will be complex due to the size of the task and the need for collaboration between all stakeholders. Monitoring compliance with standards, once implemented, may prove difficult too and may lead to fragmentation in the marketplace.
Savvy’s view
Savvy’s whitepaper is a ‘call to action’ for the gift card industry. The market needs to evolve to get to the next stage in its journey and it must put the customer experience at the fore, the company says.
“It’s time to future proof your business and you can do that with Savvy but you need to do it today,” says Eoin Whyte, chief revenue officer and co-founder of Savvy.
“It’s time to modernise gift card technology to protect consumers and better meet their needs. Standardisation will give consumers more confidence in gift cards and will help to grow the market,” Whyte concludes.
