The Rise of Digital Gift Cards: Redefining India's E-Commerce Experience

The digital gift card revolution is significantly reshaping the e-commerce landscape in India, as consumers increasingly turn to online shopping, leading to a significant rise in demand for innovative payment solutions and gift-giving options. Digital gift cards enhance the shopping experience and stimulate e-commerce growth, marking a pivotal change in how individuals interact with retailers. According to Franchise India Holdings Ltd 2022 data, shoppers anticipate they will spend more during the holiday season for the second consecutive year, with an overall expected increase of 37 percent in gift card spending this year, largely driven by Gen Z. Gift card sales are projected to see an even greater lift, with overall shoppers expected to spend 39 percent more on gift cards compared to last year. Also, Gen Z shoppers planning to increase their gift card purchases by 42 percent. This trend highlights the rising popularity of digital gifting among younger demographics and the broader integration of gift cards into the e-commerce framework. This has become a strategic tool for retailers aiming to enhance revenue and customer engagement. 

The Rise of Digital Gift Cards in India

The rise of digital gift cards in India reflects a significant shift in consumer behaviour and market dynamics, driven by several key factors.

• Increase in Holiday Spending: According to Franchise India Holdings Ltd.’s 2022 data, Indian consumers plan to increase their holiday spending despite tight budgets. For the second consecutive year, shoppers anticipate a 37 percent increase in gift card spending, largely driven by Gen Z. This shift reflects a growing trend among Indian consumers towards digital gift cards as a convenient and versatile gifting option.

• Shift to Online Shopping: A significant share of Indian consumers has moved to shopping online over the past two years due to lockdown restrictions and rising internet and smartphone penetration in the country. The growing retail market in India is being driven by the younger generation, who prefer a mobile-first approach while shopping. The rise of digital gift cards is a testament to this shift, with 92 percent of surveyed respondents stating that gift cards are most thoughtful when they can choose to shop for a gift of their choice.

• Preference for Online Retailers: According to the data, 95 percent of Indian consumers likely to buy a gift card this season will prefer online retailers such as Amazon, eBay, and Alibaba. This preference underscores the increasing trend toward digital transactions and online shopping, especially during the holiday season when consumers are looking for convenient and efficient ways to purchase gifts.

• Deals and Promotions Drive Holiday Shopping: Deals and promotions play a significant role in influencing holiday shopping behaviour. According to the survey, 63 percent of Indian respondents are prompted to start their holiday shopping when there are announcements about sales and promotions. Among those aged 18 to 34, 72 percent plan to purchase gifts for more people than last year, highlighting the importance of attractive offers and deals in driving consumer spending during the festive season.

• Digital Gift Cards as Preferred Festive Gifts: Gift cards have emerged as the preferred choice for festive gifting, with over 46 percent of consumers surveyed believing that gift cards are easier to send than physical gifts. Among a varied range of categories, 94 percent of Indian respondents plan to purchase gift cards online. Additionally, 87 percent agree that physical gift cards are appropriate holiday gifts, while 93 percent agree that digital gift cards are suitable for holiday gifting. This data reflects the growing acceptance and popularity of gift cards as a convenient and desirable gifting option in India.

Role of E-Commerce Platforms on Gift Cards Revolution in India

The role of e-commerce platforms in the revolution of gift cards in India is significant, driven by technological advancements, changing consumer preferences, and the rapid growth of digital payments. E-commerce platforms have played a crucial role in this evolution by:

• Enhancing Accessibility: The digitization of gift cards has significantly increased their accessibility across various socio-economic tiers in India, extending their reach from urban centres to rural areas. Currently, India boasts over 820 million active internet users, with more than half—442 million—hailing from rural regions, reflecting an eight percent year-on-year growth in internet penetration as of 2023. This transformation is largely driven by e-commerce platforms that facilitate the easy purchasing and redemption of digital gift cards, allowing consumers in less urbanized areas to participate in the gifting economy. As a result, gift cards are no longer just urban commodities; they have become practical and convenient options for consumers across the country, fostering a cultural shift in gifting practices and enhancing brand engagement in diverse markets.

• Boosting Sales: Gift cards serve as a strategic asset for retailers, effectively driving additional consumer spending beyond the card's face value. This tendency is especially pronounced during festive seasons when shoppers are more inclined to purchase gifts, often leading recipients to spend more than the card's value when redeeming it. The allure of gift cards not only enhances immediate sales but also fosters customer loyalty, as recipients may return to the store for future purchases, creating a win-win scenario for both retailers and consumers.

• Integrating with Digital Payments: The rise of digital payment systems in India has significantly fostered the growth of gift cards, creating a favourable environment for their adoption. According to Gullak Technologies Pvt Ltd, there has been a notable increase in digital transactions, with The Economist reporting that these transactions surged from 17% of all transactions in 2019 to 52% by 2022. This trend underscores the shift towards digitization, aligning with the government's Digital India initiative. As digital transactions expand, e-gift cards have emerged as a preferred method for secure and hassle-free transactions, enhancing consumer convenience and encouraging businesses to adopt this versatile gifting solution.

Future Prospects

The future of digital gift cards in India is poised for remarkable growth, driven by the rapid expansion of digital payments and the evolving landscape of consumer behaviour. With the Indian gift card market projected to grow, the integration of digital gift cards into the retail and e-commerce sectors is becoming increasingly significant. The surge in digital payment transactions, which have grown at an average annual rate of 50% over the past five years, is a key catalyst for this trend, complementing the government's Digital India initiative and enhancing the convenience and security of transactions. The cultural significance of gifting during festivals and celebrations further amplifies the demand for gift cards, making them an attractive option for consumers looking for flexibility and personalization. Additionally, advancements in technology, such as the integration of gift cards with mobile banking apps and the potential use of blockchain for enhanced security, are expected to streamline the gifting process and improve user experience. As businesses increasingly leverage gift cards for customer loyalty programs and employee incentives, the average spend on gift cards is anticipated to rise significantly. The shift towards digital solutions is not limited to urban areas; it is also penetrating rural markets, where the adoption of mobile devices is enabling access to digital gift cards. Overall, the digital gift card revolution in India signifies a transformative shift in how consumers engage with gifting, promising a future where convenience, personalization, and digital integration redefine the gifting experience

Conclusion

​Hence, the digital gift card revolution in India is significantly reshaping the e-commerce landscape, driven by increased holiday spending, the shift to online shopping, and rising digital transactions. E-commerce platforms have enhanced the accessibility and popularity of gift cards, particularly among Gen Z, with 42% planning to increase their purchases. The integration with digital payments and the allure of deals and promotions further boosts their adoption. The prospects are promising, with technological advancements and the growing digital economy fostering a transformative shift in consumer behaviour and gifting practices across urban and rural regions.

Please Fond Below Some Related Reports:

• India Gift Card and Incentive Card Market – Industry Trends & Forecast Report, 2030

• Asia Pacific Gift Card and Incentive Card Market – Industry Trends & Forecast Report, 2030

• Global Gift Card Market- Industry Trends & Forecast Report 2026

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