What Retailers Need to Know About Open-Loop Gift Cards
Open-loop gift cards are gift cards that can be used virtually anywhere the network on the card is accepted across the United States. Consumers recognize open-loop gift cards as an ideal gift for any number of occasions because the card allows the gift recipient to buy exactly what they want, providing the gift-giver peace of mind that their gift will be appreciated. More and more, open-loop gift cards are also being used as financial tools to help consumers with money management. Open-loop gift cards are also viewed as an alternative to using credit or debit cards for online shopping.
As their popularity continues to grow, it’s important for us to analyze consumers’ behaviors and attitudes around these versatile products. These insights have proven invaluable to our retail partners that are seeking to increase foot traffic and profitability.
InComm’s 2018 Open-Loop Gift Card Study surveyed more than 2,500 consumers to determine how they purchase and use open-loop gift cards. The study results paint an illuminating picture of the average open-loop gift card consumer, including the following:
- 73 percent of consumers plan their open-loop gift card purchases in advance;
- 61 percent of consumers plan to purchase at least one open-loop gift card every three months; and
- 28 percent of consumers spend more than the value of their open-loop gift card when shopping, and of these consumers, 43 percent spend between $20 and $50 more.
Turning these insights into action is how we can help our partners to capitalize on these trends and attract the business of these consumers.
Consumers Demand Convenience
About two-thirds of survey respondents (67 percent) selected issues related to “convenience” when asked to identify the factors that increase their likelihood of purchasing an open-loop gift card. These factors centered around gift card displays that are fully stocked with a wide range of options and are easily accessible by consumers within a store.
In other words, consumers want a shopping experience that doesn't disrupt their regular routines. For retailers, this means always having a wide assortment of open-loop gift cards in stock and displayed in a convenient and effective manner. A retailer’s gift card partner can assist with planogramming to ensure gift card displays are properly positioned to capture shoppers’ attention.
Consumers Likely to Spend Open-Loop Gift Cards Quickly
In addition to the factors that drive shoppers to purchase an open-loop gift card, the study examined how consumers typically use open-loop gift cards after buying or receiving one. When survey recipients were asked what they did with their last open-loop gift card, 79 percent said they used it. Of those that used the gift card, they used it quickly, with 92 percent of respondents indicating they used their last open-loop gift card within a few weeks of receiving the card.
The report shows that consumers are likely to use an open-loop gift card quickly after receiving it. Add in the fact that a large segment of these consumers also spend more than the value on the card, and retailers have an opportunity to build lucrative relationships with repeat customers by offering and accepting open-loop gift cards.
Opportunities for Open-Loop Gift Cards
The complete 2018 Open-Loop Gift Card Study is available on InComm’s website, and there are additional findings that will help retailers create more effective and engaging gift card programs. As consumers plan their upcoming open-loop gift card purchases, retailers have the opportunity to get ahead of the game and position their store as the go-to location for these repeat customers.
Matt Lanford is senior vice president and general manager of financial services at InComm, a pre-paid products and payments technology company.
Matt Lanford is Senior Vice President and General Manager of Financial Services at InComm, a leading prepaid products and payments technology company. He oversees InComm’s proprietary open-loop prepaid suite of products, the VanillaTM brand, including Vanilla Gift and OneVanilla.