The Indian prepaid card market is on a remarkable growth trajectory. According to an industry study, the Indian prepaid card market is expected to grow at a CAGR of 40.5 percent between 2021- 2026.
The Indian prepaid card market is on a remarkable growth trajectory. According to an industry study, the Indian prepaid card market is expected to grow at a CAGR of 40.5 percent between 2021- 2026. This is most likely because of the increased rate of internet and smartphone penetration and tremendous growth in the e-commerce segment. Interestingly, prepaid cards are most often used for online shopping and buying groceries & essentials on e-commerce platforms.
While using prepaid cards for shopping is a common practice, the one category that may witness a surge in the near future is gifting. Gifting has always been considered special in India. However, earlier, it was common only amongst select sections of society. Gradually, gifting found its way to the public at large and it then became a common practice to exchange gifts at weddings, special occasions, and festivals such as Rakshabandhan. For a long time cash has been the preferred shagun or gift for such occasions. However, ever since demonetization, digital form factors like prepaid cards have gained popularity. In fact, a leading gift card company in India had recorded a 250% daily surge in the sale of prepaid cards post demonetization.
Let us understand what these prepaid gift cards are.
Gift cards are essentially non-reloadable prepaid cards that can be redeemed at a closed group of establishments within a shopping mall, resorts, etc., or at any participating entity. For instance, Sodexo Meal Card, a semi-closed loop Prepaid Payment Instrument (PPI), can be used at various food courts, cafes, and restaurants for purchasing food items.
Recently, banks and other payment operators have begun issuing open-loop gift cards which can be used across various touch points that have RuPay, Mastercard, Visa, and other network acceptance.
Gift cards benefit both consumers in multiple ways. Let us have a look
1. Gift cards are aesthetic
Let us face it – cash is considered to be a no-brainer gift. Gift cards, on the other hand, are more personal. Most gift cards offer the choice of personalization with photographs, names, best wishes, etc. Hence, when someone is presented with such a gift card, it instantly represents the effort and thought behind the selection. If it is an open loop card such as Ongo Gift Card, the recipient is free to redeem it across all accepting touchpoints – online & offline. This bestows the recipient with a sense of freedom to choose whatever he/she wants.
2. Gift cards are more convenient
Carrying a wad of cash is always a hassle. A prepaid gift on the other hand card represents ease as it can fit in your wallet or even the pocket of your jeans. Additionally, in the case of gifting someone who lives far, perhaps in another city, sending cash or any other item is not really a cakewalk. Gift cards solve this problem. You can either send it via post/courier or you may share it electronically by the means of a virtual gift card. Further, gift cards also encourage controlled spending as the pre-loaded amount is the ONLY amount that can be spent.
3. Gift cards provide a memorable experience
Making purchases using cash is an everyday experience for all of us, especially in a country like India which is primarily cash intensive. If you present someone with a gift card, they are likely to enjoy that experience. For instance, someone who is rewarded with a gift card will truly remember and enjoy the whole experience. As opposed to cash, gift cards offer this experience that’s an intangible value to the user, making the gift all the more special.
For instance, AGS Transact Technologies rewarded four women support staff with Ongo Prepaid Cards on the occasion of women’s day, and surprisingly this was their first ever digital payment experience. These cards not only brought them under the ambit of digital India but also bestowed them with a never-before experience, making them feel more confident. You can watch the testimonial film here
4. Gift cards are secure and minimize fraud
A gift card is secure in more than one way – a) it is not directly linked to any bank account, and b) the amount is pre-loaded and cannot exceed a certain limit. Hence, the customer’s chances of losing out on a massive amount are negated. Moreover, the PCI-DSS guidelines and tokenization enhance the safety and security of gift cards on both online and offline platforms. Another security benefit that gift cards offer is the option to instantly block the card in case of an unfortunate event such as loss of card.
In conclusion
With so many features and benefits for the end-users, prepaid cards, especially gift cards, hold the potential to reshape the culture of gifting in India. As the Government of India, RBI, and other regulatory bodies strengthen the payment infrastructure by introducing measures such as tokenization, prepaid instruments will become secure and their acceptance will increase subsequently among all sections of the society.