Evolution of gift cards in India’s digital economy

gift cards

Gift cards have evolved from physical last-minute gifting options to versatile digital financial instruments, seamlessly integrating into gifting and financial transactions. The transformation of gift cards from special occasions to everyday transactions reflects a broader shift in consumer behaviour, driven by digital payments, online shopping, evolving shopping habits, and the need for secure, flexible payment solutions.

A Versatile and Rewarding Solution

Once limited to festive gifting, gift cards have expanded into mainstream financial tools, thanks to India’s digital revolution. The rise of e-commerce, mobile payment apps, bill payments, and digital-first shopping has fuelled their popularity. Today, they serve not only as personal gifts but also as corporate incentives and promotional tools.

Businesses are increasingly leveraging digital gift cards for employee rewards, customer engagement, and marketing campaigns. Their appeal lies in their flexibility and ease of use, making them an effective way to align with diverse consumer preferences.

Convenience and Security Drive Popularity

Unlike traditional gifts, digital gift cards offer unmatched flexibility, allowing recipients to choose from a vast array of products and services. Their ease of purchase, storage, and redemption makes them ideal for last-minute gifting. Digital delivery via email, SMS, or messaging apps ensures instant access, eliminating logistical challenges. Another key factor driving their adoption is the ability to remove guesswork from gifting. By providing recipients the freedom to choose from various gift options suited to their needs, gift cards enhance the gifting experience, making them a preferred option for both individuals and businesses.

Spending on gift cards is also on the rise. The average spend per gift card is expected to more than double by 2025 compared to 2020. For digital gift cards, this increase is even more pronounced, with spending projected to triple, reaching $ 5 billion by 2025. According to a report by Research and Markets, the Indian gift card market is projected to reach $15.7 billion by 2028, highlighting their growing importance in both personal and corporate spaces.

Catering to Consumer Needs

India’s gift card ecosystem is diverse, catering to different consumer preferences. The apparel, footwear, and accessories segment leads the market, accounting for approximately 32% of the total share in 2024. However, other segments are rapidly gaining traction, offering specialised options for various needs. Amazon Pay Gift Cards are among the most popular, thanks to their broad acceptance across online and offline merchants, including food delivery, ride-hailing, and bill payment services. Users can also personalise them with images, videos, and messages in regional vernacular languages, enhancing their appeal. Flipkart Gift Cards are favoured by online shoppers seeking deals on electronics, fashion, and lifestyle products within the Flipkart ecosystem. Croma Gift Cards attract tech enthusiasts with their focus on electronic gadgets, while Lifestyle Gift Cards cater to fashion-conscious consumers, offering access to apparel, accessories, and home décor.

Additionally, the rise of gaming gift cards reflects the evolving interests of younger consumers. These cards provide seamless access to in-app purchases and gaming platforms, making them an attractive option for digital entertainment enthusiasts. Multi-brand gift cards are also gaining traction, allowing users to shop across different merchants, further enhancing their convenience and value.

As digital transactions continue to grow, the future of gift cards looks promising. Innovations such as personalised gift cards tailored to individual spending habits, dynamic spending cards linked to loyalty programmes, and blockchain-based gift cards are set to redefine the space. The expansion of e-commerce and digital payments into rural areas will further drive adoption, introducing new consumers to the convenience of gift cards. As fintech companies and retailers collaborate, seamless and integrated gifting solutions will become more prevalent.

Additionally, the rise of quick commerce is set to enhance physical gift card acceptance. Consumers will be able to purchase and receive physical gift cards within hours, combining the convenience of digital transactions with the tangibility of traditional gifting.

Conclusion

Gift cards have evolved beyond their traditional role, emerging as powerful financial tools that cater to modern consumers and businesses. Their blend of convenience, security, and versatility makes them indispensable in today’s digital economy. Whether used for personal gifting, corporate rewards, or budget management, gift cards are reshaping how people perceive and use payments in India’s rapidly evolving marketplace.