Major Growth Opportunities for Omnichannel Gift Card Programs as Digital Payment Adoption Continues Rapid Rise

2020 Merchant Gift Card Omnichannel Evaluation identifies best practices, progress and opportunities for growth in omnichannel gift card programs

As consumers increasingly look for digital payment and gifting options, a new study by leading retail research firm, NAPCO Research, has found top retailers still have room to grow when it comes to keeping up with consumer demand for contactless options. Of the major retailers evaluated for the report, 39% don't accept NFC mobile payments in their stores and only 4% give customers the option to pay for a gift card purchase by scanning a QR code or barcode with their mobile device. The study identifies emerging trends, reveals areas of opportunity and highlights best practices for optimizing merchants' gift card and payment programs.

"We're starting to see evidence of permanent adoption of the shopping habits consumers tried or shifted to last year, including using contactless payments and digital gift cards," said Theresa McEndree, global head of marketing, Blackhawk Network. "Consumers have come to expect to be able to seamlessly shop with brands across in-store and online channels. For retailers, that means offering a frictionless omnichannel shopping experience is no longer a nice-to-have—it's a must have. Our latest report with NAPCO gives retailers a 360-degree view of how to begin or continue to evolve their processes and offerings to meet the changing wants and needs of their customers."

In assessing the complete gift card experience from discovery to fulfillment, merchants were scored and given points in terms of how they promote the omnichannel sale of gift cards to consumers and B2B buyers both in-store and online. The cross-channel assessment evaluated 100 leading merchants across 150 unique criteria and offers a comprehensive view into the progress and areas for growth in the consumer gift card purchase and recipient experiences. Key omnichannel gift card program trends from the evaluation include:

Retailers are slow to accept mobile payments

The more ways retailers give consumers to pay for products—including gift cards—the better chance of them making a purchase. Consumers are increasingly seeking out contactless shopping experiences as a result of the pandemic, but many merchants have been unable or unwilling to keep up with consumer demand for contactless payments. The assessment revealed:

Brands offering contactless payment options still need to inform customers
The brands that are offering mobile contactless payment options could stand to improve in making that known to their customers. Evaluated merchants earned just 8% of the available points when measured on whether they had clear signage informing customers at checkout that they accepted mobile payments. Those numbers dropped to 3% and 0% for signage indicating they accepted QR code/barcode scan payment or scan-and-go payment technology, respectively.

Mobile apps still underutilized for gift card sales
While merchants did make progress for the mobile app channel in 2020, they're still not fully capitalizing on this fast-growing opportunity. On average, the merchants evaluated that had an app earned just 42% of the points available for how easy it was to find gift cards within their app. In perhaps an even bigger area of opportunity, some merchants aren't populating gifting sections of their apps with gift cards at all. Merchants earned just 30% of the available points when scored on whether the gifting section of their app featured gift cards for sale.

Easy, secure checkout experience helps acquire new online customers
Driven by the pandemic, many consumers turned to ecommerce for their shopping needs over the last year—some for the first time. Presenting a secure, user-friendly checkout experience is a critical in helping first-time online shoppers feel comfortable and much more likely to come back and shop with a retailer again. Evaluated merchants performed well with an average score of 84% when judged on how easy, appropriate and secure the checkout experience was for the customer. However, some are still missing the mark on taking the extra step and ensuring that all necessary payment data is collected at checkout, which would ultimately help ease any consumer fears and offer merchants additional protection from potential fraud.  

The full report provides merchant scores and rankings in addition to data and insights to help merchants assess the strengths and opportunities for their own gift card programs, and prioritize areas for investment. Download the full report here.