Experts believe that by the end of 2012, we will be a big step closer to a cashless society.
Not many years ago it would have been an inconceivable idea. But, as the role and use of prepaid cards and mobile payments continues to develop in 2012, the use of cash will decline further in the next few years.
The prepaid card sector is developing fast, having experienced its highest ever year-on-year increase in sales according to the latest statistics from the UK Gift Card & Voucher Association (UKGCVA).
Looking back on 2011, many of the UK’s leading retailers have made significant investments in prepaid gift cards, with some now broadening the scope of their programmes by expanding to different delivery channels. Many retailers are now offering a digital voucher or ‘virtual voucher’ which can be sold and redeemed in store, in gift malls, online and via mobile.
This multi-channel approach to gifting allows retailers to capture every revenue opportunity across the different mediums and reach out to a broader demographic. Gift card programmes can then be expanded to offer promotions and special offers, thereby driving footfall, increasing retention and providing a competitive edge. From the customer’s point of view, it’s the ultimate in convenience - the ability to buy and redeem a voucher in the format of their choice has real appeal.
A word that crops up frequently in retail conversations at the end of 2011 is loyalty. The current squeeze on the high street, with recent figures from the British Retail Consortium (BRC) showing that high street retailers have suffered the worst drop in footfall so far this year, means that retailers are looking to boost customer acquisition and retention as well as grow the average basket size. Many are achieving this by developing the use of their gift card infrastructure to create loyalty programmes and this trend looks set to continue into 2012.
From these programmes, data can be gathered which gives retailers access to valuable customer intelligence and insight which can then be used to develop marketing and sales activities. What’s more, ‘added extras’ can also be aligned to many loyalty programmes such as exclusive promotions, special events and offers, providing an extra pull for the customer and creating an edge for the retailer in a competitive marketplace.
The trend in innovative packaging of gift cards will continue into next year, with retailers turning their focus to the appearance and presentation of gift cards. Creative packaging helps to drive spend and boost product appeal. Having a gift card stylishly packaged with the use of a box, ribbon etc, positions it as a high worth product and enables it to be displayed at key, high footfall, areas of the store.
All of these trends have played a big part in the retail sector this year and are set to continue into 2012. However, with these trends comes complexity and pressure to invest - retailers need to consider whether they have the technology to meet demand, and, if not, invest in the infrastructure in order to keep up with what is a very fast-paced industry. This can include the installation of point of sales systems such as bar codes and hardware in order to accept mobile payments and contactless payment technology.
Indeed, contactless payment is already in operation at some outlets, and the current rate of take-up indicates that this is set to grow further next year with an increasing number of retailers installing the technology to enable customers to ‘tap and go’. In fact, recent research indicates that mobile phones could replace cash by 2016 when UK shoppers will be able to use their handsets to pay for products and services on the high street with digital money rather than cash, cheques or cards. In many cases, if some of the major retailers make this investment in technology, it is likely that the others will follow.
With consumers set to cut back on spending as the current challenging economic climate continues, the retail sector must remain innovative and competitive in a busy marketplace. Prepaid cards programmes, if implemented and marketed directly can be a valuable way to attract and retain the customer and achieve stand out. Next year retailers will become increasingly appreciative of these benefits and the commercial opportunities they provide.
Written by Rachelle Smith, Regional Director for UK & Ireland at PrePay Solutions
Rachelle has been named as one of the 10 most powerful women in the international prepaid market, and works with some of Europe’s leading blue chip companies including Debenhams and the Arcadia Group.
