Mobile Wallets Dominate the News, But Most Consumers Still Want Physical Gift Cards

The holidays are approaching, and with that annual shopping frenzy comes a yearly boost in gift card sales. As it turns out, though, most gift cards are likely to be plastic or paper rather than digital, according to consumer and small-business research released Thursday.

While preference for digital cards is growing, some 60% of consumers still prefer plastic cards or paper certificates, according to the research released by Brookfield, Wis.-based financial-services technology firm Fiserv Inc. All of the remaining 40% prefer digital cards, mainly because of the ease of sending and receiving them. As with other digital payment cards, digital gift cards can be stored in e-wallet apps, which enables easier tracking of spending and balances.

The survey of 1,084 U.S. adults was conducted in the spring by First Data Corp., which was acquired this summer by Fiserv. The online canvass also questioned 628 small businesses across an array of categories about their experiences with gift cards.

For business owners and managers, the key criterion for adopting a gift card program is ease of implementation, according to the survey. Some 33% of small businesses without a program said they would start one if it were easy to install. The biggest advantage these businesses are looking for is integration with existing point-of-sale systems. 

There may be a bigger benefit for these businesses than might be imagined. Some 74% of consumers said they “regularly” buy gift cards from small businesses, while 90% of those that received a card from a business they had never visited said they would return to that store. At the same time, 56% of the consumers said they have joined loyalty or frequent-shopper programs sponsored by small businesses.

The businesses consumers most want a gift card from, in order of popularity, are casual-dining establishments, coffee shops, and specialty-services shops, such as nail salons and barber shops. The least favored business types are specialty clothing stores and gas stations.