NEEDHAM, Mass. — With the holidays fast approaching, 'tis the season for gift cards. This relatively new segment of the U.S. payments industry continues to show rapid growth — particularly in the area of bank-issued or "universal" gift cards that can be used beyond just a single retailer. Yet in some cases, gift cards appear to make better presents for retailers and card issuers than the actual giver or receiver.
 
Research and advisory firm, TowerGroup, expects gift cards to be a major hit again this holiday season. Combined gift card sales in the United States will exceed $80 billion in 2006, a more than 20 percent increase over their 2005 level. The group said the restaurant industry will achieve $18 billion in sales.
 
Industry
Projected sales
Retail                                     
$29 billion
Restaurant / Fast Food                   
$18 billion
Miscellaneous (gas, services, etc.)         
$12 billion
Universally accepted (i.e., bank-issued)
$23 billion
 
But there are still some major issues surrounding gift cards, the organization said.
 
While retailers do not generate revenue until a card is either used or permitted to be declared as dormant, they do receive a "free float" on unused cards.
 
TowerGroup said that the unused value on these cards, often referred to as "breakage" in the payments industry, has a bigger impact on consumers than the combined total of both debit and credit card fraud.

Related Content

User Comments – Give us your opinion!
Products & Services

Online Ordering

http://global.networldalliance.com/new/images/products/5931.png

5931/Online-Ordering

PeopleMatter LEARN™

http://global.networldalliance.com/new/images/products/4627.png

4627/PeopleMatter-LEARN

DriverSafe

http://global.networldalliance.com/new/images/products/keyboard_iix.gif

1424/DriverSafe

Group Purchasing Services

http://global.networldalliance.com/new/images/products/6403.png

6403/Group-Purchasing-Services

Supply Chain Management

http://global.networldalliance.com/new/images/products/6405.png

6405/Supply-Chain-Management

PCI Compliance Managed Network Services

http://global.networldalliance.com/new/images/products/4123.png

4123/PCI-Compliance-Managed-Network-Services

AquaCafe

http://global.networldalliance.com/new/images/products/6965.png

6965/AquaCafe

PeopleMatter HIRE™

http://global.networldalliance.com/new/images/products/4625.png

4625/PeopleMatter-HIRE

Enterprise Solutions

http://global.networldalliance.com/new/images/products/4124.png

4124/Enterprise-Solutions

FireFly Point-of-Sale

http://global.networldalliance.com/new/images/products/4282.png

4282/FireFly-Point-of-Sale

Digital Menu Boards and ROI
Request Information From Suppliers
Save time looking for suppliers. Complete this form to submit a Request for Information to our entire network of partners.