Gift Cards Take a Bigger Bite from Cash, Paper

The popularity of gift cards continues to grow, with some 64% of U.S. adults, or a projected 139 million people, now buying or receiving the products annually, up from 59% last year and just 36% three years ago. That's according to the latest annual survey on gift card usage from ValueLink, a stored-value card processing unit of First Data Corp. The survey, which canvassed 1,006 U.S. adults ages 18 and up, also revealed that consumer awareness of gift cards now stands at 94%, up from 76% in the 2001 survey, while the average number of cards purchased has gone from 4.1 to 6.9 in the same time period. The average sum spent on all gift cards in the previous year is $247, with 55% of respondents reporting they spend more than the initial amount encoded in the card. The increasing popularity of gift cards is taking a greater bite out of cash and paper gift certificates. In the survey, 52% say they would prefer to give a gift card over cash (which 38% preferred) or gift certificates (11%). Gift-card buying patterns are now embracing the Internet, according to the survey. While 83% of gift-card buyers say they bought their cards in person at stores, another 9% say they purchased their cards on the Internet, including on merchants' Web sites. Half of those who bought gift cards in the past say they are very likely or somewhat likely to buy a gift card from a merchant Web site in the coming year. The study, known as the Consumer Insights Survey, was conducted over five days in August by TNS Financial Services Group across a sample weighted for age, gender, region, education, and race.