The Gift Card Year In Review


Dear Gift cards:

How we adored thee in 2010. Whether you came to us in the ol' plastic covering we know and love or the sexy new digitized form we always dreamed of, we couldn't keep our hands off you.

Seriously, we couldn't, and there are numbers to prove it: As of early September, demand for you outpaced 2009 by nearly three percent, according to First Data. When November ushered in the season of giving, give we did. The National Retail Federation found you were the most requested gift nationwide, raking in nearly $25 billion -- more than five percent of all holiday transactions.      

Like a fine Cabernet, it was downright impossible to tell you no. Those who gave you life -- merchants large and small, from local restaurants to department stores -- graciously handed you over, often as a reward for spending a minimum amount. We thought of it as your dowry. Other times, you helped with daily purchases in ways we never before dreamed possible. And who could forget the government-sponsored benefits and rights you received, only to selflessly share with us?

While we could sing your praises for all of 2011, we'd rather let the future unfold as it may and reflect with fondness on the seven greatest things we had in 2010. As our relationship matures, we look forward to creating more memories, sharing more experiences, and exchanging you for the finest goods and services. (Hey, we're humans after all -- our needs are fickle.) Best wishes in the New Year, gift cards, and thanks for all you've done.

Love, America

1. CARD Act Limited Unfair Fees and Restrictions
Since the dawn of plastic, certain gift cards operated like credit cards, burdened with extraneous fees and muddled with indecipherable jargon. Such shady practices got their comeuppance this August when the Credit CARD Act of 2009 took full effect. In a year swirling with ideas like transparency and accountability (*cough* WikiLeaks), the act made a swath of positive changes across the board. It lengthened the expiration period on cards to a minimum of five years; imposed a year-long limit before service and inactivity fees can be charged; and required on-card disclosure of rules, expiration dates and contact info for balance inquiries.     

While media outlets put the heaviest emphasis on credit card users, gift card fans were pleased to find such stringent regulations applied to their preferred plastic. The changes encompassed all merchants, services and businesses, as well as gift certificates and general-use cards, including the Visa, American Express and Mastercard gift cards that can be used anywhere the network brands are accepted.  

2. Consumers Used Gift Cards For Daily Purchases
The phrase "gift card" became somewhat of a misnomer in 2010. Sure, restaurant gift cards are regularly given as presents to hungry humans and hippos alike, but several card categories -- particularly grocery and travel gift cards-- emerged as an alternate avenue to save money, much like coupons or rebates. In some ways, the popular group-buying movement fed off this idea of paying partial-price for full service. Yet unlike outfits like Groupon that offer ever-changing deals, a recurring base of discount gift cards are available year-round. 

3. Gift Card Resale Market Boomed
Gift card resale was the face of plastic innovation this year (yes, even near-perfection can enjoy change.) Online gift card resellers have been around for nearly a decade, but 2010 saw sites like Plastic Jungle and Cardpool gain momentum. On eBay, the gift card auction section alone has nearly 20,000 items available for purchase daily.

As with nearly every important trend of the past 15 years, the Internet spurred much of the growth surrounding gift card resale. Comparison sites like Gift Card Granny harness the aggregating power of the Web, making it easier than ever to find discount gift cards or trade unwanted gift cards. Now, if such a simple solution could only be applied to a certain man-made disaster that also filled headlines this year...

4. Merchants Offered Gift Card Bonuses
The next time you roll through a checkout line, you may hear the phrase, "Would you like a gift card with that?" What started as a gimmick (and a bad joke) is now a regular incentive, with major merchants offering a second, lower-priced gift card with bulk purchases. The trend started tentatively, with such offers as AMC Theaters' Movie Bundle gift cards, which included two unrestricted show tickets with two popcorn and drink vouchers for $24.

This holiday season saw some of the most enticing promotions, with both Borders and L.L. Bean giving $10 cards for every $50 spent. On other fronts, gift cards became an act of war. In mid-December, Best Buy offered the PlayStation 3 for $299 with a free $50 gift card. Walmart countered and sold the system for the same amount, upping the ante with a $75 gift card. In both cases, the gift card bonuses nearly overshadowed the hefty initial discount.  

Whether used to reward loyal shoppers or as a perk for major sales, the trend is a major win for consumers who, in the past, received only what was purchased and nothing more. They had no clue what they were missing.  

5. Gift Cards Went Mobile
Digitization was a recurring theme for all things retail this year, particularly with the advent of smartphones. Gift cards were no different. Much like digital coupons and boarding passes, a slew of major merchants now offer mobile gift cards, including Nike, Papa Johns and Lowe's. The cards are displayed as a unique number or scannable code on the screen, then entered by a cashier. Giftango, a start-up specializing in mobile gift cards, found nearly 70 percent of folks would prefer a digital gift card to a physical one, if given the choice.  

Online-only retailers have used e-mail gift certificates for years, but it took talk of a "mobile wallet" for brick-and-mortar stores to latch on in 2010. The concept takes everything under the virtual sun -- credit cards, coupons, bank accounts -- and aggregates it on a person's smartphone, where it's then accessible on-demand at the register.

Sounds genius, especially given the widespread popularity and accessibility of smartphones. Just don't drop your Android in the toilet.

6. Gift Cards Replaced Certificates for Small Businesses
Let's admit it: Paper doesn't have the consumer allure it used to; just ask coupons and newspapers. Only two years ago, under two percent of small and mid-sized businesses nationwide offered gift cards. Thanks to reasonable start-up and maintenance costs -- typically around $500 a month -- that number has spiked to between 8 and 10 percent.

The proof is apparent to early adopters. Mark Hennessey, a Santa Monica businessman, told the Los Angeles Times he often goes weeks without selling a gift certificate. Branded gift cards, however, are easier to market, track and integrate into his online store, not to mention more familiar to modern shoppers. Since introducing the cards earlier this year, Hennessey has seen a noticeable spike in sales. Other affordable alternatives, such as social media rewards through Facebook, have been adopted by a number of niche online stores and local restaurants.

7. City Exchanged Gift Cards For Handguns
Call it the year of using gift cards in less-than-ordinary ways. In late October, officials in New Bedford, Mass., gave residents $100 grocery gift cards in return for their unwanted handguns. This year was the second time law enforcement sponsored the unique buy-back program, something New Bedford Mayor Scott W. Lang called "good news for every parent in the city." The response from second-guessing gun toters was enthusiastic, to say the least: Officials took in three times more guns than the 41 collected during the 2009 campaign. Perhaps this will also give way to a new gun-control program. Veggies over violence, anyone?