Gift cards may sit with discretion next to the checkout balconies at big retail stores and probably most of the time are considered last-minute presents. However, as customers look for a more digital experience, this story has a new chapter: from how impersonal of a gift these cards are to how practical and agile gift cards bring to our digital lives.
One of the impacts of the pandemic in Latin America is the rise of e-commerce transactions. According to Brazilian Electronic Commerce Chamber (camara-e.net) and Neotrust, digital sales rose 70% in the country last year. And there’s no sign of retreat so far. Data also shows that e-commerce represented 25% of retail sales in Mexico in 2020.
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According to Global Gift Card Survey, the industry will grow 15% compared to last year and cross $221 billion by 2024, despite COVID-19 related challenges.
Unwrapping an expanding market
It is an opportunity to good to miss for the gift cards market in Latin America. For retailers, creating a digital gift card program helps boost sales and also encourages brand loyalty. In the opinion of InComm Payments‘ country manager for Brazil, Ricardo Olivieri, gift cards allow retailers to promote upsells, using the cards as instrument for engagement.
With its cards distributed in over 500,000 retail points, in 35 countries, InComm Payments is betting on Latin America. The company focuses on a two-front strategy: relationship with retailers — mostly physical — and offering prepaid cards for services from global brands, such as Xbox, Uber, Spotify, Netflix, and others.
To improve its relationship with local retailers, InComm acquired Todo in 2020. The Brazilian startup offers gift card programs and has more than 70 clients, including retail chains Riachuelo, Centauro, the fast-food restaurant chain Outback and fashion brand Havaianas. In 2020, the startup grew 20% and made greater plans for its revenue in 2021.
Gaming leads prepaid cards market (by far)
For Olivieri and Espindola, the main change was behavioral. Isolation made consumers spend more time on indoor entertainment activities, and changed their ways of giving and using these cards. Also, the scenario shifted their perception of the benefits. Another consequence was a whole new group developing digital e-commerce habits.
Another ally to the gift cards market is the entertainment industry, explains InComm’s country manager for Brazil. Netflix, for instance, registered record growth in the first quarters of 2020. The streaming giant is just one of the brands offering prepaid cards to draw new subscribers.
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Nonetheless, right now, there are no challengers to the Gaming category of cards. The executives are confident this trend will sustain for a long time in Latin America. “We use to have very good sales results in September — similar to numbers of holiday’s sales — because is the season major releases happen in the gaming industry”, states Olivieri.
In Latin America, gift and prepaid cards are a tool for access, says Olivieri. Looking to attend the customers without access to bank accounts or credit cards, InComm forecasts a three-digit growth for 2021. For the record: one in every three Brazilians don’t have access to a bank account.
João Espindola, co-founder of Todo, also points out other promising sectors for gift cards: fashion, food, drugstores, and brick and mortar stores.
“We serve gaming, streaming, food chains, fashion, retail stores, and even aesthetic clinics”, says Espindola. “The technology grants us the possibility to develop solutions with our partners’ look and feel. We can create gift cards for almost anything.”
Next target: go digital and go big
Todo develops technologies for integrating its gift cards to sales points and e-commerces to deliver smooth and omnichannel experiences to their customers. The company offers software and distribution for its clients’ gift cards programs.
The startup also intends to sell incentive cards for corporations, with a highly automated solution. Espindola explains that any company can create, insert credits and distribute its incentive cards in Todo’s B2B platform.
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In Latin America, Mexico and Brazil are the two biggest markets for InComm Payments. The company also sells gift cards in Porto Rico, Colombia, and Chile. The partnership with InComm will allow Todo to expand its solutions to these countries.
“We will provide Brazilian-based technology to the customers in Latin America very soon. InComm’s role in this strategy is fundamental”, states the co-founder of Todo.
As we look for corporate incentive cards, InComm is far from alone in the competition. Another player looking for the same market is Tango Card, which produces cards for Domino’s, Burger King, Best Buy, and Starbucks in Mexico.
Research indicates gift card market keeps advancing as more corporate cards are issued. As a matter of fact, it is also expected that the dispute expands the industry outside its gaming and streaming bubble, and inaugurates a new — and possibly more lucrative — stage in the corporative world.