by Alex Palmer | October 01, 2012
A steadily growing interest in e-gift cards and local merchants has expanded the ways in which recipients earn and redeem their gift cards - and which cards they choose.

Joan Travelstead, senior vice president of program development for National Gift Card (NGC), says that while the NGC has seen a growing interest in e-gift cards, they have yet to fully take off, partly due to the perennial concerns that an emailed award will not carry the same trophy value as a physical one, and that not all merchants offer them. But that may be changing. "The Best Buys, the Home Depots, the Targets are all on board," says Travelstead.

Online opportunities for gift cards have extended beyond e-gift cards. Online retailers like Zappos, Amazon, and have also become in-demand gift card options."If it's online and it's a reputable merchant, they have been doing very well," says Nick Balestino, manager of award partnerships for Hallmark Business Connections. He points to emerging online media sites such as Spotify and Hulu as examples of companies that may not yet offer cards, but for which Hallmark has begun hearing requests.

Thinking Local
As daily deals sites like Groupon and Living Social have spotlighted local merchants, national  incentive programs are doing the same, according to David Jones, CEO and president of Incentive CardLab.

"Gift cards are battling the perception that they are not personal enough, but when you give an employee a local card, it can carry that added meaning."

Open-Loop Options
Open-loop cards such as American Express or MasterCard gift cards continue to be popular choices.  However, the passage of the CARD Act has required some card companies to charge higher fees upfront for the use of their cards, making some open-loop cards less cost effective.

Interest in practical gift cards over "luxury" options grew after the financial crisis and has not subsided, according to gift card providers.

Healthcare-related gift cards are also trending. "There has been a lot of noise around healthcare - CVS, Whole Foods, GNC," says Deb Merkin, chief operating officer for GiftCard Partners. This has been particularly true of public programs, like those connected to Medicare and Medicaid, and looks likely to expand.

Merkin adds that dining cards remain favorites, since they are inherently social and can be shared.

Each year, Hallmark Business Connections surveys end-users to ask what it is they use their cards for. While approximately 45 percent of respondents this year said they use them for their favorite retailers, there was an increase (to about one-third of respondents) who said they used their cards to buy merchandise they would not have bought otherwise.

"If there's ever a time to give an incentive, it's when the economy is down," says Travelstead. "You have to incent employees to work harder, which is why the incentive industry as a whole has actually grown even during the down economy."