Present Playing cards Are Go-To Vacation Items of 2020

Present-card purchases within the first week of December had been twice the speed in the identical interval final yr, in accordance with InMarket, a data-analytics firm. Present card gross sales jumped 48% final weekend, in contrast with earlier within the week, as deadlines without spending a dime delivery with assured Christmas supply expired, in accordance with Rise.ai, which manages digital present card applications for greater than 5,000 manufacturers, together with Allbirds and Milk Bar.

Tim Maynard has already spent almost $300 on present playing cards this yr at retailers starting from Amazon.com Inc. AMZN -0.66% to Goal Corp. TGT 1.49% to Residence Depot Inc. HD -0.09% In previous years, the 32-year-old monetary analyst mentioned he shied away from giving the playing cards as a result of they felt impersonal.

“It was form of a final resort this yr,” mentioned the St. Clair, Mo., resident. “Not being able to get in shops and see issues makes it onerous to purchase items.”

The gift-card growth won’t assist vacation gross sales. Retailers can’t report the income till the playing cards are redeemed, in accordance with Nathan Ehrlich, chairman of the Retail Present Card Affiliation.

The playing cards might spur gross sales subsequent yr, although, as customers return to shops or redeem them on-line. “We consider a growth in present playing cards will result in a shift in spending within the first quarter of subsequent yr and past,” mentioned Todd Dipaola, InMarket’s chief govt.

There are two sorts of present playing cards. So-called closed-loop playing cards are issued by banks and branded retailers together with Macy’s or Amazon. They usually haven’t any charges and don’t expire however can solely be used on the retailer with its model on the cardboard, in accordance with David Nelyubin, a senior analysis analyst at Mercator Advisory Group Inc., a funds consulting agency.

Open-loop playing cards function on card networks akin to these run by Mastercard Inc. and Visa Inc. These playing cards can be utilized anyplace these manufacturers are accepted however usually hit recipients with charges. “Should you don’t use the cash, the charges will eat away on the steadiness,” Mr. Nelyubin mentioned.

The highest-selling present playing cards this yr are Visa, Amazon, Microsoft Corp.’s Xbox, Kohl’s Corp. and Lowe’s Cos., in accordance with InMarket.

The typical shopper is spending 17.6% extra on present playing cards in 2020, in contrast with 2019, whereas the typical variety of gift-card transactions per shopper is up 12.3% in contrast with final yr, InMarket mentioned.

A large portion of present playing cards go unused, permitting retailers and card issuers to later ebook a few of these funds as income below accounting guidelines. Mercator estimates retailers maintain roughly $3.5 billion of unredeemed balances yearly.

A portion of unused balances goes again to the states. Some states assume duty for returning the funds to customers. In instances through which customers can’t be situated, the cash goes to the state the place the issuing firm is domiciled, in accordance with Mr. Ehrlich of the gift-card affiliation.

Involved about rising Covid-19 instances, Debika Sihi has stopped going to shops and is as an alternative shopping for her family and friends digital present playing cards from native outlets this yr.

“With UPS and FedEx below a lot stress, I’m fearful that if I mail a present, it won’t get there earlier than Christmas,” the 38-year-old Austin, Texas, resident mentioned.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com