by Alex Palmer | November 21, 2017
When people use gift cards, most of them end up spending more than the full value of that card -- almost $40 more. That was among the findings of the "The Evolution of Branded Currency: 2017 Prepaid Consumer Insights Study," recently released by First Data. The study, which drew on the responses of more than 2,000 U.S. consumers, also found that for 44 percent of consumers, a gift card leads them to visit a store they would not otherwise have visited. Additionally, more than half (53 percent) said they are likely to visit a store more often because they received a gift card. This was even more pronounced among Millennials -- 55 percent of who said they would visit a store they would not otherwise due to a gift card and 64 percent of who are likely to visit a store more often.

Overall, the findings from the report illustrate how effective gift cards are as a consumer incentive, getting shoppers to spend or differently than they might otherwise. Three-fourths (75 percent) of respondents reported overspending when using their gift card, and those who overspent did so at an average of $38. This was $10 more than the average overspend by consumers last year.

The research found that gift cards can also make a potent employee incentive, with 69 percent of respondents saying they would be interested in receiving a gift card as an employee reward.

Continuing trends seen throughout the industry, "self-gifting" continues to be big among gift card users, particularly among younger generations. Sixty-two percent of Millennials reported self-purchasing gift cards, with more than one-third (37%) of consumers across age groups pointing to loyalty/rewards programs (35%) and online shopping (27%) as their biggest motivations for doing so. 

"There is a tremendous opportunity for businesses to drive sales and build brand loyalty by implementing gift card strategies and solutions," said Dom Morea, senior vice president and head of gift solutions at First Data. "From employee rewards and customer service programs to social media promotions and marketing campaigns, gift cards are their own form of currency, offering convenient solutions for gift card purchasers and receivers alike."

The report found a few other points of note: Consumers purchased an average of 6.5 physical gift cards on an annual basis, an increase from the 5.9 average purchased in 2016, 5.5 in 2015, and 4.7 in 2014. Digital gift cards were just behind, with consumers purchasing an average of 6.1 digital cards over the year, a big jump from the average of 4.0 purchased in 2016. Mobile gift card apps may be helping to drive this digital gift card use, with 52 percent of consumers saying they have used an app, and 65 percent of Millennials saying the same.

The full results of the "2017 Prepaid Consumer Insights Study" can be found on First Data's dedicated microsite.