2015 Gift Card Sales To Reach New Peak Of $130 Billion

Ninth Annual CEB TowerGroup Report Shows Industry Benefiting from Digital Growth as Mainstream Peer-to-Peer Platforms Emerge

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CEB

Dec 08, 2015, 08:30 ET

ARLINGTON, Va., Dec. 8, 2015 /PRNewswire/ -- U.S. gift card spend will hit $130 billion in sales this year, a more than six percent increase over 2014, according to CEB (NYSE: CEB), the best practice insight and technology company. The company's ninth annual CEB TowerGroup report shows that digital gift giving or "e-gifting," which registered a 26% rise this year, will continue to support overall industry growth. Long-term prospects for e-gifting remain promising as peer-to-peer (P2P) payment services become mainstream and plastic cards go digital.

The 6% growth in 2015 matches earlier CEB estimates of 5-6% annual industry growth. CEB projects that total gift card volume will reach $160 billion by 2018.

"Consumers continue to enjoy the convenience of giving and receiving gift cards in all forms," said CEB Principal Executive Advisor Brian Riley. "Both retailers and financial institutions have prioritized gift cards as a central to their strategies for gaining share of customers' (increasingly digital) wallets."

E-gifting

E-gifting, which represented $7.1 billion in volume this year up from $5.5 billion in 2014, will both support and disrupt the market over the long-term. Major new payments offerings from Apple and Chase have the potential to disrupt gifting with their wide customer bases and direct merchant partnerships. The P2P models that Apple Pay and Chase Pay will utilize have found increasing mainstream acceptance this year through offerings from Fiserv (PopMoney) and PayPal (Venmo), both of which allow rapid transfers of money using bank account details or email addresses. Based on these trends, CEB estimates that e-gifting will account for $18 billion by 2018, over 11% of all gift card spend.

Spillage

Spillage, or unused gift card volume, continued to decline significantly to less than 1% of total volume, as regulatory action has eliminated most junk fees. However, as mainstream debit and credit cards transition to new, more secure chip readers this year, gift card fraud may increase again. This is because low-cost gift cards will continue to rely on the more vulnerable magnetic strips, a relatively easy access point for fraudulent activity.

Segment Growth

In addition to the growth of e-gifting, other segment changes, which reflect CEB's projections for 2015 and revised 2014 figures include:

Open network branded cards will grow from $45 billion to $48 billion;
Retailer card volume will grow from $41 billion to $43 billion;
The restaurant and miscellaneous categories both showed limited growth with $19 billion and $13 billion in volume, respectively.

For more information on 2015 gift card sales, please visit CEB's Financial Services homepage.

About CEB

CEB is a best practice insight and technology company. In partnership with leading organizations around the globe, we develop innovative solutions to drive corporate performance. CEB equips leaders at more than 10,000 companies with the intelligence to effectively manage talent, customers, and operations. CEB is a trusted partner to 90% of the Fortune 500, nearly 75% of the Dow Jones Asian Titans, and more than 85% of the FTSE 100. More at cebglobal.com.

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SOURCE CEB