As prepaid card popularity soars, c-stores have an opportunity to attract and retain customers with a diverse range of gift card options.
Last year, pandemic-influenced shopping habits resulted in $1 trillion in e-commerce sales, according to the National Retail Federation. Many of those sales came from the purchase and use of prepaid gift cards.
This year, as inflation and high gas prices affect people’s shopping habits in every industry, the prepaid card is top-of-mind again. Whether digital or physical, the prepaid card is both driving traffic into convenience stores and giving people gifting options that also help their friends and family financially.
“In an inflationary environment, you can give someone a gift card, and it has value and it helps people,” said Peter Rasmussen, CEO and founder of Convenience and Energy Advisors and a longtime industry executive. “The past few years there has been incredible growth in prepaid card use. Diversification into digital gift cards has made a difference. Physical ones still have the lead with about 60% of market share, but digital gifting is there, even though it’s a little different to check your email on Christmas morning.”
ResearchandMarkets.com’s “United States Prepaid Cards Business and Investment Opportunities” report predicts that the prepaid card market will grow from its current value of $542 billion in 2022 to $826 billion in 2026.
So why do prepaid cards make sense for convenience stores?
Not only can they help recipients with fuel and food costs, but they also speak to the digital lifestyle so many consumers want. Whether they’re third-party cards from retailers like Amazon, Starbucks or restaurant chains or branded cards that can be used for fuel, food or items from inside the store, prepaid cards offer convenience, more safety than cash and, at times, connection to loyalty programs.
“We’ll continue to see an uptick in the number of customers activating prepaid, co-branded private-label credit cards, like the Transact Prepaid Mastercard by 7-Eleven,” said Perry Kramer, managing partner at Retail Consulting Partners. “There is a fairly balanced mix between customers who migrate to a card with a known name like Amazon and customers who are driven by watching their rewards accumulate and then be returned to them in discounts.”
Virtual Gift Cards
Combining savings, convenience and gifting could be the future of prepaid cards. Last year, Pilot Flying J launched its e-gift card program. It gives customers the ability to send and receive virtual gift cards by email or through the myRewards Plus app.
“Our e-gift card program has been incredibly popular across all categories, including fuel, food and gifts,” said Ginny Holmes, senior manager of digital products at Pilot Co. Headquartered in Knoxville, Tenn., Pilot Co.’s Pilot and Flying J travel center network includes over 750 locations in 44 states and six Canadian provinces.
“As we continue to nurture our gas audience, we’ve seen an uptick in e-gift cards used for mobile fueling,” Holmes added.
That uptick has also reflected the increase in online shopping.
“We’ve seen a completely new stream of e-commerce activity through this digital offering,” Holmes said. “Holiday shoppers loved this quick, easy option. Our guests love this more personalized experience that provides even more options for their next gift or journey on the road.”
As prepaid cards connect to more mobile payments, bank cards and apps, the combination of convenience, savings and sharing will mean prepaid cards will continue to be popular items.
“We’re going to continue to see growth in prepaid cards,” Rasmussen said. “In the holiday season, people are still going to buy gifts for one another, but they’re going to think differently about it, so they might get (recipients) gas cards or things that can help them.”
From discounts to the convenience of mobile payments, customers are looking for ease of use and convenience in using prepaid cards, while retailers are looking to reduce costs and drive traffic into stores.
And while the drive for digital is coming, the rack of gift cards inside the store will be both vital for sales and important for finding and keeping customers.
“Offering choice to your loyal customers is a strong retention process,” Kramer said.