The History of Gift Cards and its Impact on the eCommerce Industry

It seems that they have been around forever, but gift cards didn't gain traction up to around 50 years ago. In the past decades, and thanks to the rise of e-commerce, the gift card industry has become a $160 billion-plus industry that keeps on growing.

Published on 2022-09-22

As its name reveals, gift cards are a way of gift-giving —and a prevalent one. In 2006, they ranked as the second-most given gift by US consumers. By 2012, nearly 50% claimed to have purchased a gift card as a present during the holiday season. Gift cards have only grown in popularity since, and it’s easy to see why: they allow the receiver to select a present of their choice and relieve the donor of that pressure, and can be a good substitute for cash, among other perks. Most people know that gift cards benefit customers, but did you know they also play an important role in e-commerce?

In this article, you’ll learn all about gift cards—from their history to how they’ve evolved and how you can use them to benefit your business. But first, let’s define what a gift card is.

What are gift cards?

Gift cards are prepaid stored-value cards that contain a specific amount of money preloaded onto them. Customers can use them as payment at particular stores, including restaurants, gas stations, and more. There are two main types of gift cards: open-loop and closed-loop.

Open-loop gift cards belong to a particular network. Therefore, they allow customers to purchase at any establishment associated with the brand. For example, someone that has a gift card with the MasterCard logo can use it anywhere that accepts MasterCard.

On the other hand, closed-loop gift cards can only be used at specific stores.

A brief history of gift cards

We can’t talk about gift cards without mentioning their predecessor: gift certificates. They were invented in the 1930s, though they only gained traction in the 1970s. While gift certificates had many perks, they didn’t come without problems. Fraudulent activities and leaving retailers with lost revenue, among other issues, resulted in gift certificates losing popularity.

Fortunately, a brand-new product that contained all of the benefits of gift certificates and none of its problems entered the market in the 1990s: the gift card. Invented by Neiman Marcus in 1995 and later popularized by Blockbuster, gift cards have since become commonplace with most retailers.

Why are gift cards important for e-commerce?

1. They raise Brand Awareness & attract new customers.

Besides being valuable gifts, gift cards work as a marketing tool because they deliver the lifestyle and values associated with your brand. Moreover, they promote it among new customers and help you reach a new audience.

2. They drive more traffic & new leads to your website

When combined with an integrated marketing strategy, gift cards can pull in a lot of traffic to your website. Moreover, building a recognizable and reliable brand through a good gift card program can help you organically attract new leads, which could turn into loyal customers.

3. They boost sales

According to Square, gift cards are one of the most requested presents during the holiday season. Therefore, they are a perfect option for maximizing the benefits of seasonal marketing and boosting your business’ revenue.

4. They collect useful data

Gift cards often include vital information such as e-mail addresses, names, and phone numbers. Your business can use it to understand your buyer persona (a semi-fictional representation of your target audience) and better cater to its needs.

As you can see, gift cards are a convenient gifting option that also plays a crucial role for businesses, particularly in e-commerce.

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