South Africa Gift Card and Incentive Card Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

South Africa Gift Card and Incentive Card Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The market is poised to grow at a CAGR of greater than 6% by 2027. Globally, different governments are offering their citizens several incentives, including gift cards to boost the vaccination rate in their respective countries. Similar trends are visible in South Africa, where the Department of Health announced a grocery gift card program in November 2021. Notably, the gift card program aims to encourage the elderly to get themselves vaccinated in the country. Through the gift card program, the health department is aiming to achieve 70% vaccination coverage among the older age group before December 2021. The pilot scheme, which is valued at R26 million, is designed to benefit 260,000 consumers over the age of 60. Initially, the grocery gift card vouchers were announced for consumers aged 60 and above. However, the Department of Health extended the offer of R100 grocery gift cards to consumers aged 50 and above. The recipient of the grocery gift card can redeem the vouchers at Shoprite, Checkers, and U-Save stores.

Despite near-term challenges in 2021, the medium to long-term growth story of gift cards in South Africa remains strong. The gift card industry in South Africa is expected to grow steadily in H1 2021 and record a strong growth in H2 2021. The gift card market in the country will increase from USD 794.1 million in 2020 to reach USD 1552.4 million by 2025. The gift card industry in South Africa is expected to grow steadily in H1 2022 and record a strong growth in H2 2022.

The rising trend of gift card usage has drawn foreign companies to explore the market in South Africa. For instance, in March 2020, InComm, a payments technology company, launched its gift cards in partnership with Flash and Pepkor Group. The gift cards include gaming, ride-sharing, content, and streaming gift cards via Flash and Pepkor's retail network making these cards available in every South African region. Apart from this, corporate spending is also boosting the gift card market in South Africa. Organizations are increasingly making use of gift cards to rewards their employees on popular holidays in the country such as Christmas and New Year.

The popularity of cryptocurrencies has surged over the last few quarters in South Africa. With this surge in popularity, global payments are entering the South African market through strategic partnerships with physical stores that allow consumers to pay for their purchases in crypto through gift vouchers.

In November 2021, Bitrefill, the global payments firm, launched its services in South Africa. The firm allows consumers to convert their cryptocurrencies such as bitcoins into gift cards at the point-of-sale transactions. Since its launch in the country, Bitrefill has entered into strategic partnerships with several physical stores such as Pick n Pay, Cape Union Mart, Incredible Connection, and Toys R Us, among others.

Apart from physical stores, the firm has partnered with online retailers as well including Mr Delivery, Grabitall, and Netflorist. The entry of Bitrefill in the South African market will allow consumers to pay using their bitcoins across several industries, including telcos, brick-and-mortar stores, as well as restaurants. Currently, Bitrefill offers support for major cryptocurrencies such as Bitcoin, Ethereum, Dash, Dogecoin, Litecoin, and USDT.

Over the last few quarters, online sales have surged significantly in South Africa. According to the publisher, online sales in the country increased by more than 65%. This growth in the e-commerce sector has supported the growth of digital payments, including gift cards in South Africa, over the last four to eight quarters.

With the e-commerce industry expected to continue its upward momentum, the publisher projects the e-commerce market to further drive the adoption of gift cards among both consumers as well as retailers in South Africa. Notably, retailers in the country are expected to offer gift cards to consumers to drive more traffic to their online platform, thereby helping them with customer acquisition. All of these factors will subsequently boost the gift card market growth in the country from the short to medium-term perspective.

Online retailers are focusing on strengthening their customer acquisition strategy by offering e-gift cards. Consequently, the adoption of e-Gift cards is expected to increase significantly over the next 4-6 quarters. Some of the major players in the market include Shoprite Holdings Ltd, Pick 'n' Pay Stores Ltd, Internationale Spar Centrale BV, Wal-Mart Stores Inc, etc.

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