The electronic gift card market will account for €1bn worth of retail spend in Ireland by 2011, new research from vendor euroConex suggests.
A plastic card-based alternative to traditional paper vouchers, gift card schemes have proven to increase the value of customers’ retail spend by up to 20pc and in the US make up 5pc of total retail spend.
Currently in Ireland gift cards only account for 1pc of total spend. European gift card vendor euroConex and Irish firm Card Commerce expect this figure to grow quickly in 2007, however.
In addition to increased sales when compared to paper vouchers, gift cards also allow retailers to cut costs in the areas of loss through fraud, secure distribution and reconciliation, both companies say.
Both euroConex and Card Commerce have signed a partnership agreement that will see Card Commerce’s PayPlus OnDemand gift card service made available to euroConex’s network of merchants across Europe.
Louis Carron, sales director for Ireland at eurConex, said that the Card Commerce relationship will add to his company’s portfolio in tackling opportunities in the gift card and prepaid debit card markets.
The privately owned Dublin-based Card Commerce is an international provider of prepaid debit solutions and was behind Eason’s successful gift card scheme which kicked off in late 2004.
“The gift card market in the US has really taken off in the past 10 years and accounted for $60bn of total retail spend last year,” said Scott McInnes, marketing director for Card Commerce. “In Ireland and the rest of Europe, the demand has been a lot slower. However, we expect to see a 400pc growth in the number of gift card programmes in Europe over the next three to four years.
He continued: “The fact that Europe has been slower to respond is not down to consumers but rather that gift card schemes up until now have been costly to install and to manage and, as a result, were only available to the largest retailers.
“However, by making PayPlus OnDemand available over euroConex’s merchant network and by offering a standard ‘gift card-in-a-box’ package of point-of-sale merchandising and cards, every retailer from the smallest shop to the largest retail chain will be able to offer a complete gift card service to their customers and avail of the same benefits,” McInnes said.
The system will initially be available through Bank of Ireland and Alliance & Leicester Commercial Bank, euroConex’s partner banks in Ireland and the UK, before being rolled out into the broader European network in 2007.
By John Kennedy