eGift Card Sales (and Fraud) Are Highest During the Holidays
If our arithmetic is right, more than 600 million eGift cards and physical gift cards will be purchased this upcoming holiday season. 600 million!
That number is based on projections that 3 out of 4 consumers will buy eGift cards and/or gift cards this holiday season and they’ll each buy 2-3 eGift cards and/or gift cards on average.
That’s a LOT of eGift cards and gift cards!
Even better, if you’re one of the 8 out of 10 eCommerce sites that offer eGift cards, you could see a big jump in eGift card sales in the 2017 holiday season if projections hold true. Digital gift cards are:
- More frequently purchased during the holidays than physical gift cards, according to CardCash.com
- Growing at a 200% annual rate (compared to just 6% for physical gift cards)
Are your customers younger? Good news! Millennials are more than 2x more likely to give or get an eGift card.
Are your customers more upscale? Good news again. The higher the income, the more likely people are to give or receive an eGift card.
Do your customers live on the East or West Coasts? Good news once more. Those shoppers tend to buy and receive more eGift cards than people in the Midwest.
So all good news, right? Well, not exactly.
In addition to being popular with online shoppers, eGift cards are very popular with card-not-present (CNP) online fraudsters, too.
In fact, eGift cards were the #1 targets of fraud attacks between Black Friday and Christmas out of all the products sold by a leading payment processor’s merchants in 2015.
That’s not surprising. eGift cards are digital goods and digital goods have a reputation for higher fraud rates. After all, they are…
- Easy to purchase
- No delivery to expose the fraudster’s physical location
- No storage of stolen goods inventory
- Fast, easy conversion to cash
That last point is worth emphasizing. The growing emergence of secondary gift card marketplaces makes it simple for fraudsters to turn eGifts into cash at redemption rates as high as 80 cents on the dollar.
What’s the best plan for cashing in on the eGift card phenomenon this holiday season without getting burned by chargebacks and fraud losses? Leading analysts recommend a multi-layered approach capable of integrating different technologies and techniques that capitalize on Big Data in a comprehensive yet efficient manner. At a minimum, look for:
- Multiple, advanced fraud screening technologies
- Real-time data orchestration hub
- Advanced Artificial Intelligence (AI) & Machine Learning technology
- Human intelligence with deep fraud fighting expertise
- Complete fraud prevention platform (integrated, comprehensive)
eGift cards may not be your biggest seller this holiday season. But if you’re not careful, they could account for the biggest percentage of chargebacks and fraud losses come January. If you’re one of the 8 out of 10 online businesses that offer eGift cards, download the eBook “eGift Card Fraud: The Gift That Keeps On Taking” and find out how to protect against eGift card fraud, while still safely selling more of these popular holiday gift offerings than ever before.