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Consumers Pick Virtual Gift Cards Over Plastic

Gift cards . / Credit: Gift cards image via Shutterstock

As long as they deliver real-world goods, virtual gift cards are OK with consumers, new research shows. In fact, when given a choice between a physical gift card and a virtual one, the majority of consumers would choose the virtual option.

Gift cards have become ubiquitous, available for sale at a seemingly endless array of locations and retailer checkout lines and a staple of various consumer loyalty programs. According to the National Retail Federation, gift cards were the most requested holiday gift for 2011, the fifth year in a row that they've topped consumers' wish lists. TowerGroup, a financial services research and advisory firm, estimated that total spending on gift cards — both virtual and plastics — in the U.S. would hit a high of $100 billion by the end of last year.

The growth of mobile technology has changed consumers' preferences about how and when they use gift cards. In particular, people are embracing virtual gift cards delivered to their email inbox or mobile phone via text message. In fact, Affinion Loyalty Group (ALG), a loyalty products and services provider, found that when given a choice between a physical gift card and a virtual one for a particular brand, nearly 61 percent of consumers chose the virtual option.

[SWAGG App Lets You Manage Gift Cards on Your Phone]

In another survey of loyalty program participants, ALG found that more than 76 percent of respondents would choose delivery of the virtual gift card as an email. Only a small fraction of the population would opt for delivery of the card as a text message to their mobile phone. More than 66 percent of respondents ranked virtual gift cards as easy to use when redeeming them at their selected merchants.

"Virtual gift cards is a burgeoning market within loyalty programs and beyond," said Mike McDonnell, an ALG VP. "And the virtual boom is predicted to continue. Virtual cards are forecasted to reach $8 billion in 2013 and $11 billion in 2014, according to TowerGroup."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.