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Rise of Gift Cards: How Digital Gift Certificates

As smartphones proliferated in the late 2000s, Gift Card providers rushed to develop mobile-friendly digital solutions.

Gift certificates have come a long way since the first physical store gift certificates were introduced in the 1990s. At first, gift certificates were primarily plastic or paper vouchers that could only be redeemed at a single retailer. Major retailers like Walmart, Target, and Starbucks were among the first companies to issue gift certificates as a gift-giving alternative to cash. Over the next decade, gift certificates usage grew steadily as more merchants adopted the concept.

The real growth spurt happened in the 2000s with the rise of digital and multi-store gift certificates. Companies like GiftCards.com launched websites where users could purchase digital gift certificates that could be delivered instantly by email. This helped address some of the main pain points with physical cards like loss, damage, and expiration dates. Multi-store cards like Visa and American Express gift certificates also hit the market, allowing recipients to spend their values at thousands of participating merchants.

The Growth of Mobile Gift Certificates

As smartphones proliferated in the late 2000s, Gift Card providers rushed to develop mobile-friendly digital solutions. Websites and apps now allowed users to preview designs, easily send cards via text, and track redeeming activity in real-time. Companies including Giftly, GiftSmart, and GiftGrabber launched as dedicated mobile gift certificates providers separate from retailers.

This helped fuel even greater adoption among younger demographics comfortable with mobile payments. According to studies, mobile platforms accounted for over 20% of annual gift certificates sales by 2015. Customizable e-cards sent via text also grew as a more personal alternative to traditional static vouchers.

Major merchants took notice and began heavily promoting their own mobile gift certificates infrastructure. Apps from Walmart, Target, Starbucks and others allowed generating and sending digital holiday cards with a few taps. Integration with mobile wallets like Apple Pay further streamlined the redemption process in-store. As of 2019, over 70% of gift certificates purchases involved a mobile device at some stage of the transaction.

Rise of Secondary Resale

As gift card balances went unused over time, secondary marketplaces emerged for people to easily liquidate values for cash. Pioneering sites like CardPool and Raise allowed uploading photos of physical or electronic cards for potential buyers to purchase at a slight discount. This provided a reliable way for recipients wanting cash to recover some value rather than letting a card go unredeemed. On the flipside, it gave savvy shoppers an avenue to get everyday discounts on merchandise.

The resale business has flourished over the past decade with major players consolidating the market. Sites like CardCash and GiftCardWiki handle billions of dollars in annual transactions. Cash for gift certificates is also now integrated at major online exchange platforms like Craigslist. The secondary market has alleviated some recipient rejection of physical cards by providing reliable cash-out options. It also benefits consumers looking for deals year-round instead of just during initial purchase promotions.

Future Growth Areas

Going forward, a few key areas will shape continued expansion of the gift certificates sector:

Social gifting & ecards: With social platforms moving to their own gift economies, more cards will be sent via chats and stories rather than dedicated storefronts. Customization, sound/video, and recipient notifications will enhance personalized card exchanges.

Mobile wallets: Integration with payment apps on iOS and Android means gift certificates may one day seamlessly transfer like digital cash between contacts’ phones. Nearby sharing of balances could accelerate micro gifting for low values on-the-go.

Blockchain applications: Distributed ledgers may help curb fraud by securely verifying card ownership through the transaction lifecycle from purchase to redemption. Smart contracts could automate multi-step gifting processes beyond a single transfer.

Alternative fintech models:Buy-now-pay-later lending could facilitate splitting card costs over time. Cryptocurrencies may pair with cards as a new medium of exchange in the sharing economy. Interoperable universal gift balances independent of specific merchants are also envisioned.

Overall, with continuous innovation led by emerging mobile and financial platforms, gift cards seem primed to remain a staple giving method for the foreseeable future. Their frictionless digital delivery, flexible utility, and expanding resell channels have well-established them in mainstream gifting culture.

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