Consumers: ``Gift Cards Burning Holes in Our Pockets''; Paymentech Survey Reveals Consumers Rushing to Redeem Gift Cards, Major E-Tailers Most Popular Shopping Sites in 2004

Business Wire, Jan 4, 2005

DALLAS -- Forty-one percent of the consumers who received a gift card this holiday season plan to redeem them within two to four weeks - and 16 percent had already redeemed them a mere three days after Christmas, according to the 2004 Paymentech Holiday Spending Survey.

The Dec. 26 to Dec. 28, 2004 survey of 800 consumers across the country was conducted to gain insight into what people got - and gave - for Christmas. The Paymentech survey revealed that consumers are indeed purchasing and giving more gift cards this holiday season than before, with 48 percent of those surveyed saying they received at least one gift card; 16 percent received three or more. In the 2004 holiday season, gift cards were predicted to account for 8 to 10 percent of holiday sales, totaling more than $17 billion, according to the National Retail Federation.

Department stores most likely to see shoppers redeeming cards in January

Department stores were most likely to entice shoppers into buying a gift card, with 28 percent of respondents finding these cards under the tree. Other popular stores were specialty stores, which made up 24 percent of gift cards received, and another 21 percent came from mass discounters. Restaurants, home improvement stores, grocery stores and gas stations, respectively, were popular gift card choices this season as well. Most of the cards given away this holiday were valued between $25 and $50.

Gift cards always the right size

The survey proved that gift cards continued to rise in popularity, and the biggest motivating factor is their "one-size-fits-all" quality. Contrary to previous years, in which gift cards carried a stigma of being impersonal, respondents were decidedly split down the middle in stating their own preferences. Almost half preferred to receive gift cards, and the other half preferred to receive gift items.

Major e-tailers reaped online rewards

Responses from online shoppers bear out pre-Christmas news reports that major e-tailers, (notably those such as Amazon.com, Overstock.com and eBay that do not have a traditional retail presence), would be the big winners this holiday season. Amazon.com reported in December that it had set a one-day record during the holiday season of 2.8 million orders, according to The New York Times.

According to the Paymentech survey, one-third of those who shopped online said they made their holiday purchases from major stores like these, and the second most popular sites, where 26 percent of respondents chose to patronize and purchase, were specialty e-tailers of clothes, books and music.

Another 24 percent shopped online at department stores, mass discounters, home improvement stores and restaurants, respectively. According to VeriSign, shoppers spent $8.8 billion online this holiday season, up 24 percent from the same period last year.

Here are summarized results from the 2004 Paymentech Holiday Survey:

--48 percent of consumers surveyed received at least one gift card this holiday season.

--About one-third of recipients purchased between three and five gift cards during the 2004 shopping season.

--Nearly one-third of gift cards received were from department stores.

--More than half of the respondents said the cards they received were valued between $25 and $50.

About Paymentech

Paymentech, L.P. processes more payment transactions than any other company in North America - and more than half of all Internet transactions - for retailers accepting U.S. and international payments via traditional point of sale, Internet, catalog and recurring payments. The privately held company, founded in 1985, is an end-to-end processor for merchants of all sizes and industries. Paymentech's 1,500 employees office in multiple locations, including the Dallas headquarters; New York; Salem, NH; Tampa, Fla.; and Tempe, Ariz. In 2003, Paymentech and its Canadian affiliate, based in Toronto, processed 7 billion transactions and $162 billion in card volume in 14 currencies. For more information, please visit www.paymentech.com.

For a full copy of the survey results, contact: