Jan 23, 2008 6:01 AM, PROMO P&I

Gift cards are big business, and the category is set to get explode exponentially over the next several years, according to a report from publisher Packaged Facts.

The report, called the “U.S. Market for Prepaid Cards with a Focus on Gift Cards,” projects gift card sales will increase by $14 billion over the next five years. It notes that gift cards have been steadily gaining momentum to their current position on the leading edge of the closed loop segment of the $81 billion prepaid card market.

In the short term, the report says nearly 35% of consumers who bought gift cards in the past 12 months expect to spend more on them in the next 12 months. More than 9% of those surveyed said they expected to spend “significantly more” on gift cards during that span.

On the receiving end, 53% of those who have redeemed cards said often or always they spend more than the gift value, most likely in two store visits.

“Gift cards have been accepted by the mainstream for an increasing variety of events in which gift cards are normally exchanged and for an increasing variety of ways to spend those gift cards funds,” said Tatjana Meerman, publisher of Packaged Facts, in a statement..

The report focuses on eight of the leading players in the gift card market. The full report is available at http://www.PackagedFacts.com.

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