Gift cards are on the rise, especially among young adults. This fact may seem to run counter to other trends regarding the spending habits of Millennials, but is nonetheless undeniable, thanks to data out of Mercator Advisory Group. “Consumers and Prepaid: Growing Use, Especially for Retailer Specific Cards” is a result of a survey conducted by the firm that asked more than  3,000 U.S. adults about their purchase habits related to prepaid and virtual cards, and then examined the results as a function of demographic.
Overall, the percentage of shoppers buying prepaid cards saw a bump of two points, up to 63%, compared to 61% in 2015. Unsurprisingly, the most popular prepaid option continues to be retailer-specific gift cards, with 45% of responders making at least one gift card purchase during the past year.
In addition to familiarity with the payment option, this boost in retailer-specific cards may come partially as a result of other loyalty programs (specifically grocery) that award points for all purchases, gift cards included. In essence, this provides shoppers “free” loyalty perks by purchasing gift cards to retailers they already shop. Some grocers have even leveraged this trend by offering bonus incentives on gift card purchases, further boosting the retailer-specific prepaid card boom.
Also contributing to the rise in prepaid usage is the ease of use introduced with the continued growth of retailer mobile apps.
“Retailers are introducing more mobile-based apps and offers when using their loyalty and prepaid programs, which may be fueling this growth in retailer gift card purchases,” said Karen Augustine, manager of Primary Data at Mercator Advisory Group and author of the report. “Young adults continue to lead this mobile revolution and growing use of prepaid cards as a money management tool.”
Maybe the story of the report is the leap forward for young adults purchasing prepaid cards: Almost 60% within the 25-34 age segment have purchased these cards, further supporting the idea that mobile apps have bolstered the demand for these offerings.
What we’ve come to know as gift cards have been around for over 20 years, and those two decades have brought about countless ebbs and flows. With the advent of mobile apps and digital loyalty programs, however, the best may be yet to come for prepaid payment options.

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