Bank-Issued Gift Cards To Gain More Of The Pie
By 2007, sales of bank-issued gift cards will exceed USD 31 billion or over half of gift card volume for that year, according to Tower Group. Conversely, in 2004 bank-issued gift cards accounted for just USD 3 billion out of USD 45 billion in total gift card sales, the same report shows. Washington Mutual and First National Bank are the latest to issue MasterCard and Visa-branded gift cards to tap the new market opportunity. About 7 million Visa and MasterCard stored-value cards are in issue in the US to date and this total is increasing, the Federal Reserve recently estimated.Banks argue that their association-branded gift cards are popular with consumers, who welcome the ability to spend the cards anywhere the card brand is accepted, instead of at a single retailer. In other words, a recipient of an association-branded gift card can use it at an affiliated merchant anywhere in the world, which increases the appeal of bank-issued gift cards to frequent travelers. For an extra edge on its competitors, Washington Mutual is selling its gift card online, where an authorized credit or debit card can be used to buy and have the gift card shipped to a recipient. Of twenty banks surveyed in 2003 by Unisys Corp, half expressed an interest in issuing stored-value cards themselves, with Bank of America, Citigroup and JPMorgan Chase the first to dabble in the market. IDC/Financial Insights predicts the stored-value card market (including debit, gift and payroll cards) to exceed USD 290 billion by 2006, up from USD 160 billion in 2004, and to represent a market opportunity of over a trillion dollars within a decade. Traditional credit card processors were the initial providers of prepaid cards, but in a maturing market, this is changing. Related Links:
