Pioneering fintech Miconex has launched a first of its kind digital gifting product for towns and cities, under its new global Love Local brand. The digital gift card will work through the MasterCard network and digital wallet services such as Apple Pay, and is Miconex’s latest initiative alongside EML Payments Limited (ASX: EML).
Miconex operates over 100 Town and City Gift Card programmes around the UK and Ireland, and Downtown Gift Card systems across North America, which unify a wide range of businesses behind a local gift card to create a secure, flexible gift and reward product for consumers and employers. A Love Local app developed by the payments provider to accompany the new digital gift card will enable recipients to add the digital gift card balance to their Apple Wallet, or other digital wallet, view participating businesses, see their balance and spend online or in-store.
The Love Local brand will become an umbrella brand for Miconex’s Town and City Gift Card programmes in the UK and Ireland, with digital gift cards facilitated through the Love Local app. Colin Munro is the managing director of Miconex and said the Love Local brand was created for its universal appeal:
“The shop local sentiment is evident in our work with programmes in the UK, Ireland, Canada and the US. Developing the Love Local brand allows us to convert that love local sentiment into spend, in a brand that will be as recognised and understood in Cambridge UK as Cambridge Canada. Theoretically, you could have your Downtown Gift Cards in your Love Local app alongside your Town and City Gift Cards. The Love Local brand also provides us with flexibility as we continue to develop new products for different use cases, and new tools for businesses and places to interact directly with an engaged consumer audience. The potential for Love Local is huge.”
The 2021 GCVA State of the Nation report suggests that the pandemic has accelerated the trend for digital gift cards, with 38.4% of respondents converting to digital gift cards. Whilst in-store redemption remains the most popular way to spend gift cards (54.8%), this has decreased considerably vs. 2019 (69.6%) indicating a trend towards online and mobile redemption. 21.6% of respondents redeemed their gift card via mobile in 2020, up from 11.4% in 2019.
There is also a clear move towards local shopping, with a reported 2000% year on year increase in online searches for ‘support local businesses’ in 2020. The GCVA found that almost a quarter of consumers (24.5%) purchasing a gift card for someone else in June 2021 did so to support local businesses and/or their local high street, with a similar percentage (24.9%) planning to continue to use gift cards to support local businesses.
A new Scotland Loves Local Gift Card, powered by Miconex and backed by the Scottish Government and Scotland’s Towns Partnerships, was announced in June. Mr Munro said the introduction of digital gift cards was prompted by demand from towns and cities, and consumer trends:
“Working alongside our partners EML, MasterCard and Apple, we have created a cutting edge digital gift card product for towns and cities, breaking down the barriers that have previously existed and enabling places to have their own digital gift card for the first time. We listened to what our clients told us they wanted from their gift card programmes, whilst staying attuned to consumer trends.
“An estimated 1 in 3 adults are said to choose gifts based on how soon they can get them. For consumers, digital gift cards are instant, meaning they can send a last minute gift conveniently, whilst also supporting local businesses. The digital gift goes straight to the recipient. They receive a text or email, click on the link to download the Love Local app, then receive a code to add the balance to their digital wallet, making their purchase using their phone, or even their Apple watch. Ease of use for consumers is paramount, as is the trend towards mobile payments which is particularly pronounced in the UK.”
It is estimated that by 2023, almost 12 million people in the UK will use their phones as their primary payment method. In 2019, 81% of Brits were using some form of online payment, the highest percentage in the world. By 2022, mobile payments are projected to overtake both cash and credit card as the preferred payment method, second only to debit card.
Research shows a link between age and the use of digital wallets. 48% of 18-34 year olds have a digital wallet, falling to 44% of 35-44s, 37% of 45-54s, 29% of 55-64s and 22% of 65 plus users. Mr Munro believes their new digital gifting product will help towns and cities to engage a younger demographic:
“Data from our 2020 Christmas period sales showed that our gift card transactions were largely driven by Boomers (55 plus) at 34.88% and Generation X (35-54) at 32.33%, demonstrating the growth potential of the Millennial (25-34) and Generation Z (16-24) age groups. We also know that it is younger consumers that are particularly driven to support local through gift card purchases, 17.1% across the generations in 2020, but 25.2% in the 25-44 age group.”
Benefits of digital gift cards noted by consumers include the perception that it is easier to shop online with a digital gift card, plus sustainability and environmental benefits. A trend towards omnichannel redemption was also noted by the GCVA, with 62.6% of respondents expecting flexibility in where gift cards can be used. Mr Munro adds:
“With a digital gift card in their armoury, towns and cities can appeal to a wide range of consumers, but by combining a digital gift card with a physical gift card, places can give customers the ultimate choice and flexibility in how they spend their gift cards, which is what they will increasingly expect.”
Miconex’s new digital gifting product will include a new pricing structure to make it accessible for towns and cities to adopt said Mr Munro:
“Miconex’s new pricing structure will allow local authorities and business improvement districts to phase their set up costs for their local gift card programme across 3 years, paid annually or monthly. The gift card market in the UK is worth an estimated £7bn, £4.65 billion from consumer sales and £2.34 billion from rewards and incentives, and Christmas is one of the busiest times for gift card sales. Our mission is to help as many towns and cities as possible to convert the interest in gift cards, in digital, and in supporting local into spend, creating an unbeatable consumer proposition for their area.”
“Miconex ensures Love Local towns and cities remain streets ahead with EML's consumer-friendly, digital era gifting choices in the U.K. and Ireland,” added Nikki Evans, CEO Europe at EML.