Gift Cards go Virtual and Mobile

Last-minute couch-potato shoppers rejoice! It's become a whole lot easier to send gift cards almost instantly. Six big-name retailers and one major credit card issuer have rolled out e-gift cards, according to's 2011 Gift Card Survey, a nod to the growing popularity of online shopping.

"Retailers are adding them in droves," says Rebekka Rea, executive director at the Retail Gift Card Association. "It's definitely something that if retailers don't have now, they are behind."

Starbucks, Best Buy, Gap Inc., Pizza Hut, Staples, and American Express all added a virtual version of their gift cards since last year's survey. Consumers simply buy the e-cards online and send the gift card directly to the lucky recipient's inbox. No worrying about shipping a plastic card in time. And no getting out of your pajamas.

"We added the (e-gift card) option because we increasingly see our customers access our brand through mobile and online means," said Pizza Hut spokesman Chris Fuller in an email to Bankrate.

Still, the e-gift card market is small. Ben Jackson, a senior analyst at Mercator Advisory Group, says that e-gift cards made up about 4% of the $97.2 billion gift cards brought in last year. But he expects the market to continue to grow, even if plastic gift cards stick around.

"There will always be people like me who remember my sister's birthday is tomorrow and I need to get something to her in Florida," says Jackson, who is in Massachusetts. "E-gift cards have a future."

In all, more than half of the cards in Bankrate's survey were available as e-cards too. Only one retailer, Costco, eliminated its e-card this year.

Bankrate's 2011 Gift Card Survey surveyed 63 gift cards in total: eight network-branded gift cards and 55 other gift cards, including those from chain restaurants, online stores, grocers, department stores and big box stores. This year's survey added 10 new gift cards: six from major airlines and four gas gift cards. It dropped the Borders gift card because the retailer filed for bankruptcy in February.

The survey includes two types of gift cards: closed loop and open loop. Closed-loop gift cards can only be used at a single retailer or chain. Open-loop cards feature a credit card brand such as Visa or American Express and can be used anywhere that brand is accepted. For a complete listing of surveyed cards and Bankrate's findings, see our chart.

'Friendly' Gift Cards and Ones on Your Phone

Another major takeaway from the Bankrate study is the bubbling interest in social media and mobile options for connected consumers on the go. Target and Starbucks introduced mobile phone gift cards that can be used in all their locations. And made it possible to send a gift card to someone's Facebook wall.

"Consumers are buying these gift cards in every available channel they can," says Rea. "So it behooves retailers to have multiple purchasing avenues."

Starbucks launched its mobile card payment effort in September 2009 for iPhone and iPad users, and the company added BlackBerry smartphones a year later. At the beginning of this year, the company made the mobile payment option available in all of its 6,800 company-operated stores nationwide.

At the time, Brady Brewer, Starbucks' vice president of card and brand loyalty, said in a statement that the mobile payment program delivers convenience, rewards loyalty and continues "to build an emotional connection with our customers."

Amazon unveiled its Facebook gift card in November 2010, after the results of Bankrate's 2010 Gift Card Study were published. The consumer can create a gift card from various designs and then have the card posted on the recipient's Facebook wall. The sender can schedule when the gift card will appear up to a year in advance.

Fees, Expiration Dates and Other Features

Overall, most retailer gift cards in Bankrate's survey, including gas gift cards and airline cards, have no dormancy or maintenance fees and no expiration dates. The exceptions are Pilot Travel Centers and H-E-B grocery stores. Pilot Travel Centers may charge a $1.20 fee if the gift card has been inactive for two years. H-E-B will deduct $2 per month from the card balance if it hasn't been used in a year, which is a change from the 2010 study.

Seven of the eight network-branded cards feature some kind of fee; either a dormancy, maintenance or purchase fee. Only Fifth Third Bank MasterCard gift cards are fee-free. Five of the open-loop cards had expiration dates, but the funds on a Wells Fargo card never expire. American Express and Discover gift cards both featured "valid-through" dates. Customers can request a replacement card after the original card's "valid-through" date passes.

None of the closed-loop cards and just two of the open-loop cards require a personal identification number, or PIN, to conduct a transaction, which makes them easier for thieves to use. A third of the companies won't replace the card or funds if the gift card is lost or stolen while a few charge a fee or impose other limitations.

Gift cards have ranked as the No. 1 requested gift item for four straight years, according to the National Retail Federation. So, to make sure your gift card brings joy -- and not stress -- this holiday season, choose a card that reflects your recipient's shopping needs and habits, not just one that's convenient for you.