Gift card market will grow 8.7% in Latin America

The gift card market in Latin America is expected to achieve a compound annual growth rate of 8.70% during the 2022-2027 period, according to estimates by EMR, a team of consultants in more than 15 industries.

“Gift cards are a type of promotional item, in the form of a debit card, offered by a retailer or bank to attract new consumers, increase brand recognition, promote business, and drive sales.

They are also known as gift certificates, gift vouchers, and gift tokens. They can be used as an alternative source of money, as they are prepaid cards that hold a set amount of money, allowing cardholders to purchase goods and services at a particular store or business. Today, they have emerged as a popular method of sending greetings on special occasions or expressing gratitude for someone’s hard work,” according to the EMR Expert Report.

They explain that the Latin American gift card market is experiencing significant growth due to increasing digitization, the increasing use of gift cards as marketing tools by multiple businesses, and the growing trend of gifting culture and electronic purchases.

“The expansion of the industry can also be attributed to increased demand in the commercial sector, along with the growing trend for corporate gift cards to reward employees for their efforts and contributions. In addition, the growing demand for online streaming services is expected to generate a high demand for entertainment-based gift cards, which in turn will drive the growth of the market in general”, they mention on their website informesdeexpertos.com.

They believe that the development of software such as Gyft, an app available on iPhone and Android that allows users to load their gift cards and spend them every time they shop, is expected to provide lucrative opportunities for key players in the industry. “However, the limited validity of gift cards, fees associated with transactions, and security concerns may be some of the factors hindering market growth.”

Options in Mexico

In Mexico, the gift card market is extensive, they are used mainly for birthday gifts, gift exchanges or for corporate gifts on special dates such as Christmas, New Year, Mother’s Day, among others.

The market has physical or virtual cards and is classified into two types: Close Loop (Closed Loop) and Open Loop (Open Loop).

Closed Loop gift cards are personalized cards that must be used in a store or with the brand that issues them. While those of Open Loop, are issued by banks and can be exchanged in different establishments.

According to Kardmatch, there are gift card options from 100 to 10,000 pesos or more, this depends on the issuing brand or company. However, the usual prices are usually 100, 200, 300, 500 and 1,000 pesos. “The main factor behind the success of gift cards in Mexico is supply and demand, however, it is accompanied by a cultural change, since more and more ‘there is a lack of time’ and ‘freedom for people to choose your gifts.’”

The gift card market in Mexico has an expectation of growth of around 10% per year, according to specialists.

patricia.ortega@eleconomista.mx