As smartphones become an increasingly essential tool in people's everyday lives, digital gift cards stored in mobile wallets are becoming a much more popular way to spend on items, as well as track budgets. More often than not, the smartphone is quickly becoming the preferred means of payment among consumers, says a recent survey conducted by InComm Digital Solutions
, a provider of point-of-sale technology solutions.
That same survey found that 53 percent of consumers are interested in storing and using gift cards on their phones and 50 percent of respondents agree that they would prefer to have a digital gift card scanned from their mobile device than to carry an email printout. Additionally, 55 percent of consumers -- and 75 percent of Millennials -- showed an interest in storing digital gift cards on their phones for their own personal use.
The bottom line? Digital gift cards are here to stay. In a 2013 study, the U.S. Federal Reserve noted that "mobile point-of-sale (POS) purchases tripled in usage from the previous year."
What's driving that growth in popularity? "There are two primary drivers: speed of delivery and market penetration of smartphones," says Mike Fletcher, general manager of InComm Digital Solutions. "When given the option, a high percentage of consumers prefer to receive their gift card instantly. The proliferation of smartphones and the increased comfort level that consumers have related to transacting business on their mobile device is equally important."
And is that growth extending into the incentive gift card market? "Definitely," says Fletcher. "A high percentage of gift cards issued in the incentive space are for self-use, and the ordering process takes place online. Consumers select their card, they generally know what they want to use the card for, and their preference is to get it instantly. We see adoption rates of between 40 and 60 percent in the incentive space over night when a client offers digital gift cards for the first time."
When it comes to using digital gift cards effectively in an incentive program, Fletcher says choice is essential. "Many consumers prefer choice," he notes. "The most successful programs make both digital and physical cards available, and they present the fulfillment options after the brand has been selected."
He also says that digital gift cards can make it easier to promote incentive programs, too. "One of the benefits to digital is that it opens the door to new types of incentive campaigns and promotions," Fletcher says. "For example, incentive companies are able to run short duration campaigns and instantly reward consumers for taking the desired action. They can also offer lower denomination options to the recipients as a result of the lower cost of fulfillment. Digital allows you to customize the user experience in short bursts without the cost and logistics of managing printing."
For planners hoping to incorporate digital gift cards into an incentive program, Fletcher offers the following advice: "Make sure you have an easy way to re-deliver the card if someone accidently deletes it or loses track of it. That's a benefit of digital, so customer service should be smooth. Go with a broad catalog and see how your consumers respond -- review and modify the portfolio frequently. The ability to shift and modify is another benefit of going with digital. Jump in, as digital is growing fast. And don't worry about your participants adopting digital -- they will!"