2.5.1. INTENSE COMPETITION FROM ALTERNATIVE GIFTING SOLUTIONS AND PRODUCTS
Intense competition from alternative gifting solutions and products presents a significant challenge for the gift card market, as consumers now have a wide array of personalized and
experiential gifting options to choose from. Traditional gift cards are increasingly competing with subscriptions (like Netflix, Spotify, or meal kits), curated gift boxes, personalized
merchandise, and experience-based gifts such as travel vouchers, spa packages, or online courses. These alternatives often provide a more memorable or emotionally engaging experience,
especially for consumers seeking thoughtful, unique gifts. For example, of this shift is the growing popularity of platforms like Airbnb Experiences and MasterClass, which offer giftable
experiences and learning opportunities. During the 2022 holiday season, Airbnb reported a surge in bookings for giftable experiences, highlighting a consumer trend away from generic monetary gifts toward more experiential
offerings. Similarly, subscription boxes like FabFitFun or Bespoke Post have seen consistent growth, offering themed, personalized items that appeal to niche interests—something a general-
purpose gift card may lack. According to, TD Bank's 2024 Merry Money Survey Nearly half (45%) of consumers plan to gift experiences over physical items, with younger generations leading the
way.
Gen Z (68%) and Millennials (61%) are at the forefront of this movement, while Baby Boomers (23%) remain more attached to conventional gifts. This shift in gifting preferences puts
pressure on the gift card industry to innovate and provide more value-added or personalized options to stay competitive. As a result, while gift cards remain popular, the increasing variety and
appeal of alternative gifting solutions present an ongoing challenge, forcing traditional players to evolve their offerings or risk losing market share.
2.5.2. RAPID CHANGES IN CONSUMER PREFERENCES IMPACTING TRADITIONAL GIFT CARD MODELS
Rapid changes in consumer preferences are posing a significant challenge to traditional gift card models, as today’s consumers demand more flexibility, personalization, and digital integration
in their gifting choices. The classic plastic gift card with fixed values and limited brand usage is increasingly being seen as outdated, particularly among younger demographics who prefer
digital, on-demand, and experience-driven gifting. Consumers now expect features like customizable messages, instant delivery, multi-brand usability, and integration with mobile wallets and
loyalty programs.
For example, of this shift is seen in the growing popularity of multi-brand and digital-only platforms like Giftcards.com or Gyft, which allow users to choose from a range of
retailers and personalize the card experience. Meanwhile, legacy brands relying primarily on in-store plastic gift cards have seen slower growth. For instance, while digital gift card sales rose by over 20% in 2023, according to a report by
Blackhawk Network, sales of traditional physical gift cards remained flat or declined, especially during online-heavy shopping events like Black Friday and Cyber Monday. A 2023 survey by
InComm Payments found that 68% of consumers prefer digital gift cards over physical ones, with preferences shifting even more drastically among Gen Z and Millennials. This evolving
behavior challenges traditional gift card issuers to adapt their offerings or risk becoming irrelevant in a market that now values speed, personalization, and seamless digital use. Thus, staying
aligned with these changing consumer expectations is critical failure to innovate could lead to a decline in market relevance and competitiveness. 3. MARKET FACTOR ANALYSIS
chain because it is the stage in which issuers can define their program architecture,
compliance levels, and operational framework.
At this stage, retailers, brands, banks,
and payment networks design card offerings from three core offerings: closed-loop
cards (redeemed at a single merchant), open-loop cards (redeemed across broader
networks like Visa or Mastercard). or multi-retailer cards. A few important design
considerations include denomination flexibility, activation process, expiry rules, service
fees, and delivery method (physical or digital). On the technical side, issuers have to
contend with stored-value liability, fraud prevention mechanisms like tokenization and
PIN encryption, and compliance for AML/KYC legislation. In the United States, the
nuances of the design stage are complicated by the requirement of compliance with
state-level escheatment laws specifically around how issuers treat unused balances
while limiting the profit potential of breakage.
restrict, and often prevent, expiration and requires local compliance to tax compliance. Additionally, due to the complexity of cross-border issuance in Europe, issuers must
adapt for currency, language, and consumer protections. Increasingly, issuers are 1 2 3 4
turning to API connectivity-based issuance platforms, real-time code generation, and
mobile wallet integrations to improve scale and
