'Tis the Season for Gift Card Giving: TowerGroup Predicts Card Sales to Rebound to $91 Billion in 2010

NEEDHAM, Mass., Nov. 24, 2010 /PRNewswire/ -- Leading research and advisory firm TowerGroup, a subsidiary of Corporate Executive Board, today released estimates based on its annual review of the U.S. gift card market.  Spending on gift cards for the 2010 holiday shopping season will increase for the first time in three years, reaching $91 billion in sales.  Analysis in the TowerGroup ViewPoint, "CARD Act Impact: New Regulations Set to Wipe Out Gift Card Junk Fees and Reposition Market," predicts this growth will continue, with the industry reaching $100 billion in sales by 2012.  

In addition to the increase in spending on gift cards, "breakage" (the value left unused on gift cards) will decrease by almost 50 percent, compared to 2008, to 3.1 percent, or $2.5 billion.  This significant decrease is due in large part to increased consumer protection under Title IV of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, which severely restricts expiration and nuisance fees for gift cards, a subset of prepaid debit cards. Consumers are also seeking to stretch every dollar this shopping season, given continued economic uncertainty.    

"The new protections afforded to consumers under Title IV of the CARD Act have greatly increased consumers' willingness to use gift cards as a form of gift giving," said Brian Riley, senior research director, Bank Cards, at TowerGroup.  "Additionally, as new technology, such as mobile and social media mediums, are used for electronic gifting, the gift card industry will position itself for long-term growth in both domestic and international markets."

TowerGroup's research shows that consumer preference for general-purpose reloadable network cards is rising while sale of retail-specific gift cards is decreasing.  

Additional insights in the TowerGroup report include:

• Gift cards will continue to play a substantial role in the global commerce market, especially as card issuers implement technology enhancements to the product.
• New regulations provide more credibility for the product and return value to the customer, although they still fall short in protecting card security.
• The generally anonymous nature of gift cards precludes protections for lost and stolen cards.

For more information on TowerGroup please visit www.towergroup.com.

About TowerGroup

TowerGroup, a subsidiary of The Corporate Executive Board Company, is the leading research and advisory services firm focused exclusively on the financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world's leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America and Europe, TowerGroup serves a global client base.

Visit www.towergroup.com for more information.

SOURCE Corporate Executive Board Company; TowerGroup