Gift cards have been around for decades and are a quick way to load money on a card for a consumer to use at a specific retailer. In the past, gift cards were a common gift to hand out to others. However, as of late, millennials are changing this concept and are instead purchasing refillable gift cards and pre-paid gift cards to use for themselves.
A study conducted by the Mercator Advisory Group discovered that around 3-in-5 young adults specified they had bought refillable gift cards within the past year, compared to less than half during 2015. Those surveyed between 18-24 years of age showed an increase in using refillable retail gift cards from 44% to 53%, as well as those between 25-34 years of age from 48% to 57%. The overall spike is even more drastic with a 39% to 57% increase of gift cards for the 18-35 year old range between 2013 to 2016.
What could be causing this recent surge of refillable gift cards amongst millennials? Experts feel the rise in popularity has to do with retail mobile apps and the connection with gift cards. Instead of millennials using a physical gift card and refilling it once the funds have expired, they are instead refilling the gift cards digitally onto the retailer’s mobile app to use the money for their own personal use.
"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 report author, Karen Augustine. "Young adults continue to lead this mobile revolution and growing use of prepaid cards as a money management tool."
One retailer who has had overwhelming success with linking their app with gift cards is Starbucks. In fact, around $1.2 billion of customer cash has been contributed toward their gift card and mobile app with around one-quarter of the entire amount of transactions made at Starbucks stores are done through their app.
For the on the go millennial, the Starbucks app has been beneficial as it allows a customer to order and pay via the app in advance, skip the line, pick up their drink at the counter and be on their way.
"I believe that millennials are taking advantage of the plethora of mobile apps that retailers have introduced that support their prepaid cards, and they start using more prepaid cards in general for their own use," Augustine said. "We see more prepaid cards being bought for personal use, not just for gifts."
Other popular gift cards millennials are attracted to include pre-paid cards from issuers such as Visa and American Express. Similar to refillable retail gift cards, these pre-paid gift cards are also reloadable and are mobile-friendly. Within the past three years, one-third of millennials has used or is currently using a reloadable prepaid card.
"We are now seeing the next evolution of prepaid," said Tony Chang, VP-U.S. product and client marketing at Visa, which has been in the prepaid space since 1994. "Prepaid is mainstreaming, and it provides such a great opportunity to be thinking about how prepaid services fit a diverse set of consumers."
Refillable and pre-paid gift cards have shown to be a good gift for millennials to use for themselves. Not only are they convenient, mobile, and quick but also are great options for the busy young adult.