Paypal takes on fast-growing market with Australian gift card e-store

Payments giant Paypal is taking a tilt at Australia’s digital gift cards market, unveiling an e-commerce store that will offer retailers a new channel in a fast-growing market.

The move is expected to shake-up the emerging digital gift card space, signalling an uptick in competitive pressure on existing players like Prezzee and Wright Express owned giftvouchers.com.

Paypal will launch the offer in partnership with 40 retailers, including eBay, JB Hi-Fi, Rebel Sport, RedBalloon, The Iconic and Adrenaline. The storefront is also expected to provide opportunities for a raft of other retail brands as the service is expanded.

Paypal said vouchers are a popular go-to gifting option for Australians, and consumers will increasingly look online, rather than in-store, for the cards in the coming years.

Paypal Australia’s Emily Curlewis said shoppers are being driven towards digital gift cards by their concern for the environment, citing commissioned survey data that found 63% of shoppers would prefer a digitised option for vouchers.

“It is clear that Australians are becoming more environmentally conscious, and this is now translating to their shopping and gift-giving experiences,” she said in a statement.

Queensland University of Technology associate professor Dr Gary Mortimer told SmartCompany the Paypal platform would provide both customers and retailers with a new opportunity to cash in on a fast-growing part of the retail market.

“Paypal has looked at a growing market, they’ve looked at the smaller players already providing the service and this is a way of taking their existing account holders and leveraging that,” he says.

“Jumping onto an online platform means that [small retailers] can move from small geographic markets to millions of people nationally.”

Mortimer said that recent regulatory changes to gift cards in Australia were also encouraging adoption of digital consumption as consumers became more accustomed to longer expiry times on vouchers.

The New South Wales government passed laws last year that mandated a three-year expiry period on gift cards sold within the state, which prompted many retailers to simply remove expiry on cards nationwide. The federal government has also proposed extending expiry dates for all gift cards to a minimum of three years.

Paypal’s platform will enable customers to leave personalised messages or schedule gift deliveries, while the company will be offering a 15% discount on selected vouchers over the next week.

Competition to intensify

For Prezzee the entrance of Paypal is likely to be a disruptive presence in the market.

The digital gift card startup was launched in 2014 and has forged partnerships with many of the same retailers now on Paypal’s new platform, including JB Hi-Fi and Rebel Sport.

While retail partners will now have more choice, founder Claire Morris singled out her company’s focus on personalisation when asked how the business would compete.

“This is an exciting time to be in the digital gift card space as both consumers and businesses move away from plastic gift cards and towards digital gift cards,” Morris said in a statement to SmartCompany.

Prezzee has expanded its core offer to include a range of ancillary services since launching, including a swap service that enables customers to gift generic cards that can be redeemed in equal value with partner cards.

“Our innovative Prezzee swap card has really resonated with Australian consumers and businesses which really sets us apart from any competition,” she said.

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