In the heart of Mayfair, within the luxurious confines of The Artemis Room at Bacchanalia, Tillo recently hosted our first TilloConnect event, Future Frontiers.
This intimate roundtable discussion, led by Tillo Advisor and former Director General of the Gift Card and Voucher Association, Gail Cohen, brought together a select group of visionaries and leaders from the digital rewards and fintech sectors for a night of fine dining and deep conversation into the past present and future of the gift card industry.
Innovating at the Roots: A reflection on the industry's evolution thus far
The evening began with a journey back in time, exploring the pivotal moments that have shaped the gift card industry into the vibrant and thriving sector we are incredibly proud to be a part of today.
The transition from physical to digital gift cards was unanimously considered one of the most significant turning points - driven by growth in the B2B sector and increasing consumer demand for a seamless digital shopping experience.
“Look at the margins in payment processing; they’re nothing close to gift cards. The power is with the consumer now, and it’s all about UX - that’s where the importance of that superior gift card margin comes in because if you take it and are creative with it, then you can give so much back to the consumer and everyone will benefit - the brands, the buyers and the customer.”
Yet despite a surge in demand for digital cards, many of our guests still noted a demand for physical gift cards within their businesses, particularly in categories like grocery and coffee, where physical persists, despite a general move towards online shopping elsewhere.
“Within our B2B space in particular, there is still very much a need for physical gift cards with more of a focus on personalization and branding.”
The discussion also explored the role of the COVID-19 pandemic in accelerating this digital transformation, forcing consumers to adopt online shopping and embrace digital payment methods they may previously have chosen to avoid. Even when COVID restrictions were lifted and the high street reopened, many consumers remained converted to online shopping and digital payments, having now experienced the benefits and feeling more comfortable with its use.
“There are so many instances like COVID, where an event was needed to push people into changing their behavior - when there's a better solution which is smoother, swifter, more frictionless.”
With older generations now more familiar with digital gift cards and emerging digital-first generations choosing them as their preferred gifting and payment mechanism, the future looks positive for the digital space, but that doesn’t mean neglecting the physical realm altogether.
More than just a gift: Gift cards are part of the payout revolution
With starters cleared away and the main banquet unfolding, the conversation then evolved to focus on the role of gift cards beyond traditional gifting.
From their uses as a cash-out mechanism for loyalty points and cryptocurrencies to their ability to unlock discounts for cashback and instant consumer rewards, gift cards have proven themselves to be a scalable, secure, and trustworthy payout mechanism across various sectors.
“They're not a gift card. They’re not a gift - they’re stored value, making them easier, quicker, simpler, and much more cost-effective than any legacy payment.”
“Gift cards as a product are really important for us in driving new customers, so actually that margin we give off in these environments is more than worth it in terms of expanding our customer base.”
“Younger generations are more financially savvy, and retailers are willing to give away money to grab that customer, and discounts do that for them.”
This then reignited a common debate on the naming of Gift Cards. Does labeling them a gift restrict their usage and adoption beyond B2B and B2C gifting? Would consumers lose trust in gift cards if businesses began referring to them as branded currency or stored value? Could renaming gift cards to make their use as a payment and payout mechanism more obvious ultimately backfire and bring forth regulation that would restrict their usage going forth?
“Does there need to be some level of synchronicity within the industry? No other market is so convoluted in its naming conventions.”
“We’ve tried to call them so many different things - digital money, branded currency, coupons, shopping cards - nothing is sticking, and ultimately it depends on the audience.”
The naming debate continues, but all agreed that regardless of name, gift cards are capable of offering unique value propositions to both businesses and consumers, including reducing the cost of acquisition, encouraging engagement, and building loyalty, and it is our role as businesses who are using them to tell this story in whatever way makes the most sense to our audience.
“Self Use and Gifting are two different experiences, and they need to be treated as such.”
“The market is big enough for everyone; we just need to communicate the benefits more clearly.”
With use cases for gift cards expanding and their significance as a payment mechanism growing, the conversation naturally turned to discuss consumer concerns over fraud and security - specifically, how gift cards are often portrayed negatively by the media and who is responsible for ensuring the safety and security of consumers.
“Fraud is a joint responsibility of everybody.”
“Often gift cards end up in the headlines, but ultimately a crime is being committed, and it’s not the gift card's fault. The problem is not the gift card, it's the stolen credit card used to buy it.”
“We’ve gone from password-protected spreadsheets to issuing gift cards via API, and that evolution in itself is so much safer.”
“There are so many places security can break through from a consumer POV - they can lose their self-purchase code at a lot of places - but with processors like Tillo, that’s not the case.”
The Future is Clear - Or Is It?
As dessert was served, the future of gift cards then took center stage, with guests sharing their five-year predictions for the gift card market during a quick fire round:
- “Regulation may come in, and there'll be winners and losers. Everyone will be on a level playing field, and there will be benefits off the back of it, but you need to be prepared.”
- “The lines will continue to blur between traditional payment methods like Visa and Mastercard and gift cards.”
- “We’ll see a lot of maturity in emerging markets.”
- “Partnerships are already super important for our business, and I think it will be impossible to move forward without using aggregators in the future.”
- “More fintechs are recognizing gift cards as a revenue source, a means to cross borders, and a value proposition, and it's just getting started - it will explode!
These predictions revealed the importance of staying agile and proactive in navigating the future of gift cards, and while, on the whole, the future appears bright and promising, it must also be tempered with caution, acknowledging that challenges do lie ahead for our industry, including regulatory hurdles and the need for continued innovation to meet evolving consumer expectations.
To summarize the evening
As we reflect on the insights shared at our first TilloConnect event, it's clear that the journey of gift cards is far from static.
From their roots as simple gifts to their emerging role as strategic financial tools, gift cards are still evolving and challenging us to rethink their potential and at Tillo, we are committed to leading this charge by exploring new frontiers.
What’s next for TilloConnect?
After the resounding success of our first TilloConnect event, we’re already busy planning something for the summer of 2024 - an event that will bring Tillo’s Brands and Buyers together in person for 1:1 networking and collaboration.
To find out more, keep an eye on your inbox and on our new TilloConnect web page.
