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The Real Truth About Gift Card Breakage

This is part one of three on why gift cards get a bad rap. 

Let me just say upfront – gift cards are amazing. I have been in the industry for a while now and am really impressed by these little juggernauts of value. An entire brand, a whole shopping experience, and a future promise of an awesome item or experience is packed into an easily giftable form. For the last five holiday seasons gift cards were the #1 requested gift by men, women, children. I love them, everyone I know loves receiving them. They make great gifts.

So why are there news stories and blog posts every so often (especially in December and January) ranting about gift cards? What is the main complaint? There are three factors:

  1. A perception gift cards aren’t personal enough
  2. Some gift cards come with fees
  3. There is a certain percentage of the value of the cards that never gets used – what the industry calls breakage.

For this post I want to focus on the last point – breakage. According to a 2012 CEB Tower Research report – gift card breakage will be around $1.7 billion in 2012 – sounds like a lot, huh? Actually, it is only equal to about 1.6% of the amount of cards sold which is projected to be $110 billion. There are a number of factors – a new law called the CARD Act prevents expiration or fees within 5 years on retail gift cards – this has helped make the entire industry friendlier. Additionally cards are easier to use and retailers are encouraging use. Breakage is actually down 20% for 2012.

Gift card breakage can be solved with Tango CardEven though breakage is down, almost $2B in unused gift cards is still a whole lot of money.

Why aren’t the cards getting used? Three primary reasons:

  1. The gift card is forgotten or lost (and if it’s digital it’s buried in your email somewhere)
  2. You forget to bring it with you when you go to the restaurant or store (how many cards can you carry at once anyway?)
  3. It was a gift card to a store you just may never visit.

At Tango Card we have simply built a better product to address all of these. One of our core missions is to ensure every recipient of a Tango Card uses their entire balance and has a great experience doing it. We have a mobile app on the IOS App Store and Google Play for Android users. Our app allows you to store all of your gift cards in one place and Gift card breakage is bad - solve that problem with Tango Card's mobile appsuse them directly in stores. You’ll always have them with you and never find yourself out and about without them. We remind our customers when they have balances and find new and interesting ways they can use their gift cards. Lastly, the Tango Card itself is full of choice – with 18 of the top stores and a handful of non-profits to redeem at – it will always be the perfect gift and never goes unused.

We think gift cards are awesome – and have built a company around ensuring they stay that way!

Trackbacks/Pingbacks

  1. Gift card fees are just unnecessaryTango Card - February 5, 2013

    […] This is part two of three on why gift cards get a bad rap. You can find part one here. […]

  2. Gift card fees are just unnecessaryTango Card - February 5, 2013

    […] This is part two of three on why gift cards get a bad rap. You can find part one here. […]

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