DENVER — First Data Corp., a major card processor, has reported a study that indicates that cards have become more popular as a means for giving out employee bonuses than checks or cash.
The study, which polled 501 incentive program decision makers at companies with more than 100 employees, indicates that the market for corporate incentives offers opportunities for merchants looking to expand their gift card programs.
The median company incentive budget for respondents is $50,000, and approximately 33% expect to increase the share of their budgets allocated to gift cards. The study looked at both use and preferences regarding closed loop gift cards from individual merchants and open loop gift cards that can be used at numerous merchant locations.
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Today, almost 62% of incentive gift card purchases are for retail stores, including discount, specialty and department stores, followed by restaurants, which make up approximately 24% of all single merchant gift card purchases for business incentives.
"The market potential for the use of business incentives continues to grow," said Mark Herrington, president of First Data Prepaid Services. "Gift cards as incentives appeal to businesses because recipients can purchase what they want, the cards are easy to distribute and they have a high perceived value among recipients."
Most gift cards are purchased from the merchant's store (40%), or directly from their headquarters or central point of sale (37%). This information, combined with other data that shows what influences decision makers most when selecting a particular branded gift card can help merchants develop incentive gift card programs that effectively target the corporate incentive market.
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