Business Research & Analysis
Popularity of gift cards in Australia has grown rapidly in the last few years. The gift card market in the country has shown significant growth over the past five years, increasing at a CAGR of 21.3%. The country's gift card market in terms of transaction value is expected to reach US$ 2.8 billion by 2020.The Australian gift card market has become more technology intensive. Over the forecast period, PayNXT360 expects rate of innovation while using gift cards for marketing activities to intensify. While gift cards are predominantly marketed as an alternative to giving presents on special occasions, adoption in corporate sector has been increasing. Businesses are using prepaid cards as part of their broader business strategy, for promotions and to achieve other marketing objectives. Financial services sector has been a late adopter of gift cards but usage has increased over the last couple of years.
Presently, Australia Prepaid Gift Cards in plastic account for 64% market share, as they are preferred while being given as present to family and friends. However, card issuers in Australia are focusing on promoting digital gift card usage as they are finding increasing popularity with millennials, who prefer to make online transactions for a variety of functions including online shopping, and prefer to buy digital gift cards for self-use. Secondly, digital gift cards are difficult to forge, thereby help in reducing chances of fraud.PayNXT360 expects growth in digital gift cards would be crucial for growth of the overall gift card category in Australia during the forecast period. Card issuers in Australia are introducing gift cards, especially targeting millennials and teenagers. Both segments share common attributes in terms of managing financials (approach towards management of finances, savings, and spending) Global Gift Cards Market Size, which is unique from other consumer groups. Given that smartphone penetration in both the segments is increasing rapidly, we expect integrated solutions with prepaid cards combined with mobile application to be launched and drive innovation in the space. We also expect competition to intensify in this segment with players forming partnerships with top retailers to provide exclusive offers for its card users. Integrating prepaid cards with mobile application is going to be a key differentiating strategy for Australian issuers over short to medium term. This is expected to be done for a range of prepaid cards, especially where loyalty programs and other services can be integrated with overall banking services. Travel, gift, and general purpose cards are likely to be key focus areas.
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