The Majority OF The U.K. Gift Card Market Is B2B

Pop Quiz: Whole buys most of the gift cards in the U.K? It’s probably not who you would think, in fact, it isn’t who at all.  According to the UK Gift Card and Voucher Association, the majority of the nation’s gift card market is B2B.  What’s more, that B2B market it’s getting bigger and going mobile.

Who buys the majority of gift cards and vouchers?  Depending on who is asked, answers will like gather around two poles: “the unimaginative,” (normal humans) “the awesome” (teenagers and the unsentimental).   Both groups would be wrong, or at least they would be if they happen to live in the U.K.  The majority of gift cards aren’t bought by “who’s”- except in a technical legal sense- but instead by “what’s”, specifically business.

According to research released by the UK Gift Card and Voucher Association (UKGCVA) 54 percent of the U.K.’s £5 billion ($8.2 billion)  gift card and voucher market is business-to-business (B2B).  The research further demonstrated that spending on B2B gift cards is on the rise—direct sales were up 6 percent in the first quarter of 2014, while online sales were up around 5 percent. The majority of the B2B spend was on cards to be used as motivational tools for employees

Gift cards and voucher makes sense for employers inclined toward motivating, rewarding or recognizing employee accomplishment, and allows them to do it for cheaper.  Business purchasing gift cards in bulk typically save between 2.5 percent and 7.5 percent on their face value. That baseline, however, can be expanded—as some employers build gift cards and vouchers into a larger employee rewards program. As a side benefit, it also helps businesses create creating symbiotic relationships between themselves and other businesses.

Quicker, Easier and Cheaper

The gift card or voucher is not a new idea—businesses have been using them since at least the 1930’s to lure customers, and employers have been increasingly incorporating them into employee compensation models for the last 25 years, according to the source, reports Employee Benefits.

The technology, however, has been evolving.  A long time ago in a corporate and retail galaxy far, far away gift cards and vouchers were all on paper.  While the retail market phased out paper-based gift cards out almost entirely by the time Y2K had failed to created a technological apocalypse, B2B has shown its normal resilience when it comes to avoiding modern conventions around ditching paper.  There are still holdout in the B2B space who prefer to work with paper—often because they can be custom created (with a company logo etc) as part of a wider rewards programs.

However, the even among paper-happy business payments crowd the electronic voucher’s siren song is becoming increasingly difficult to ignore.  Electronic cards are easier to deliver and reload, and far cheaper to manage.  They also offer employees greater ease of use.

Electronic cards are also more available as open-loop cards, meaning they use payment networks, Visa or MasterCard for example, and are accepted at multiple locations.  Paper voucher are generally closed-loop, meaning they can only be used at certain merchants.

Mobile: The Next Frontier

The UK’s first virtual gift card—the MasterCard backed Giftsplease—was launched earlier this summer.  It can be sent to anyone in the world, to be spent anywhere that MasterCard is accepted.

Mobile cards offer employers, particularly those with employees spread across the globe to both reach their employees with benefits—but also to build that corporate rewards ecosystem that can all be redeemed from any mobile device.

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