SHREWSBURY, Mass.—Millennials are proving to be a boon to the gift card market, according to a new report that also indicates these young adults are spending those cards on themselves.
Millennials are behind a surge in sales of retailer-specific gift cards, according to a Mercator Advisory study of 3,009 U.S. adults in June. The report reveals that loyalty rewards given when purchasing the cards through mobile apps are sparking the trend.
“Much of the growth in prepaid, and now, even in retailer-specific cards, is from young adults, particularly 25–34 year olds. Retailer specific cards are typically bought by consumers of all ages, but recently, young adults are most likely to buy even retailer-specific cards, nearly three in five young adult respondents indicating they bought them during the previous year, up from less than a half of young adults who did so in the 2015 survey,” Mercator stated.
As retailers introduce new mobile apps, often with mobile payment options that include their retailer prepaid cards, young adults begin to buy retailer cards for their own use, so the cards are becoming a primary payment tool and not just used as gifts, the company said.
Overall, the survey found that 63% of U.S. adults bought prepaid cards in the latest study, up from 61% in 2015 and 56% in 2014. Retailer-specific cards are the most popular type of prepaid cards, bought by 45% of U.S. adults, up from 41% in 2015.
Women continue to be more likely than men to buy retailer-specific cards, as 49% of women—and only 40%—of men bought this type of card within the previous year. However, the number of men buying retailer-specific cards has grown steadily since Mercator began tracking purchase of this type of prepaid card in 2013, the company said.
“Young adults continue to lead this mobile revolution and growing use of prepaid cards as a money management tool,” stated the author of the report, Karen Augustine, manager of primary data at Mercator Advisory Group.