Heading for colleague’s wedding anniversary celebration but don’t know what to gift? Try gift cards.
A gift card largely works on the principle of a voucher. Such cards are usually issued by a bank or a non-bank institution or even a retailer and are available at their respective outlets.
In India, the business of gift cards is likely to boom as both online and offline retail proliferate here, says American Express. The company said it may look at launching co-branded gift cards.
“Gift cards are an alternative to cash and offer convenience and valuable benefit. Unlike credit cards, which need consumers to have a certain credit score to own one, a gift card can be bought from banks or even at select outlets. Also, customers shopping online prefer to use a gift card for security reasons,” said James Mirfin, Vice-President and General Manager, Global Payment Options, American Express India.
Amex gift cards are available in denominations of Rs 500 to Rs 5,000.
On India still being a largely cash-transaction market, Mirfin said despite low penetration, the segment was on the upswing as the e-commerce platform was growing fast. He said prepaid cards related to gifting, payroll and travel were gaining acceptance.
Interestingly, American Express, which has launched gift cards in India, the first such initiative outside North America, said a large chunk of its market was in the corporate segment.
The pre-paid cards market, including salary, travel and gift cards, has been growing 35-40 per cent annually. Of the $30-billion gifting market, gift cards only account for about $40 million, Mirfin said. Asked about revenues, Mirfin said bankers usually charge a purchase fee.
Players such as State Bank of India, Yes Bank and ICICI, too, have forayed into the business, though the segment offers miniscule revenue stream.
Analysts say the reason why banks are entering the business is to up their brand equity, besides offering an assortment of services.