Do gift cards need to be plastic? Hallmark, Blackhawk test paper options.

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Facing rising payment card environmental-impact concerns, card networks and banks are switching from harmful virgin plastic to using recycled and biodegradable materials for credit and debit cards. Now gift cards are going green too — using paper.

Gift-card giant Blackhawk Network this month announced plans to roll out more sustainable paper-based versions of its Visa gift cards as part of a long-term plan to end reliance on first-use plastic for more than 700 million cards the company helps produce annually. 

The first wave of paper-based Visa prepaid gift cards will roll out in the U.S., Canada and Australia beginning this fall, after the gift card firm last year pledged to convert most of its globally distributed gift cards to more sustainable materials by the end of 2024. Blackhawk began plans years ago to convert many of its store-branded gift cards to paper-based and recycled-plastic materials, the Pleasanton, California-based company said in a press release this month.

The move syncs with Mastercard's mandate announced earlier this year that by 2028 all new credit and debit cards on its network must be made of recycled plastic.

But different pressure to make gift cards more eco-friendly comes from a California legislative bill nearing finalization that dictates that no retailer in the state may sell virgin-plastic cards after Jan. 1, 2027.

Unlike certain other payment card mandates necessary for security that have cost banks millions — like the U.S.'s shift to chip-enabled credit and debit cards that began in 2015 — California's crackdown on virgin-plastic gift-card stock could be less painful, with potential upsides for gift card providers, experts say.

For one thing, paper is an ideal medium for non-reloadable gift cards, because they don't need to last for an average of three to five years of routine use like bank-issued credit and debit cards, said David Shipper, a strategic analyst with Datos Insights. "Compressed-paper gift cards are durable enough for a few uses, and while there's a risk the cards will expand or fall apart if they get wet, these risks are negligible since the cards will only be used a few times anyway," Shipper said.

It's unlikely consumers will choose a gift card because it's made of paper versus plastic, but promoting gift cards as more environmentally friendly will undoubtedly be a positive for issuers, card networks and merchants, he added.

It's hard to say whether boosting consumer awareness of gift cards' environmental effects might nudge more consumers to begin using digital gift cards, which have existed for years but have been relatively slow to gain traction with consumers, due to entrenched habits.

Despite exponential growth in digital gift cards in the last decade, 62% of consumers still want to give a tangible gift card to friends and families, according to a survey Fiserv conducted among more than 1,000 U.S. consumers conducted in November 2022. Fiserv is a major provider of physical and digital gift cards.

About one in three consumers are buying more digital gift cards than physical gift cards, and 62% are interested in using more sustainable or biodegradable materials, the survey suggested.

"Digital gift card adoption is rapidly expanding, and not necessarily at the expense of physical gift cards," said Thomas Niedbalski, vice president of global sales and partnerships at Fiserv, in an interview earlier this year.

At holidays in particular, consumers prefer giving a tangible gift card, but digital card adoption is growing at a faster rate, he said. 

About half of consumers Fiserv surveyed said they're interested in gift card innovations that could personalize the gift-giving experience, because 38% of respondents also said they want recipients to be able to unwrap a gift somehow. 

As if answering these sentiments, Hallmark Cards recently announced an initiative with Venmo combining the traditional greeting card with a more secure, Venmo-powered digital gift card.

The Hallmark + Venmo greeting card line announced last month will be available in stores for a range of occasions, enabling customers to scan a unique QR code inside each card sold for a base price of $4.99, choosing the amount they want to give, while preserving the ability to hand-write a message within the greeting card and deliver it in person or by mail. 

Recipients must scan the QR code to access the gifted amount in their own Venmo account, and because the sender must specify the recipient's Venmo account, phone number or email, the funds are accessible only by the intended recipient.

Drawbacks to Hallmark + Venmo include the fact that it's only a seamless experience if the recipient already has a Venmo account; otherwise they must sign up for one. Also, they can directly spend the funds only at the relatively limited number of merchants that accept Venmo, noted Shipper. (Hallmark + Venmo gift card recipients can also transfer Venmo funds to other accounts.)

But Hallmark + Venmo also could help bring more consumers used to buying physical gift cards in brick-and-mortar stores into the digital gift-card sphere, which could benefit card networks and merchants trying to modernize cards to improve their bottom line, according to Shipper.

"The gift card industry is in a great position to push consumers toward sustainability because consumers are happy to receive gift cards in any form, and apart from environmental benefits, digital gift cards distributed via email, text and mobile wallet have a lower cost-per-unit than physical cards," he said. 

Blackhawk Network has been developing more sustainable gift-card materials since 2017, the company said.

"Collaborating with influential brands like Visa is helping us create a more sustainable payment card market," said Talbott Roche, Blackhawk Network's CEO and president, in the company's press release.

Visa is also working with the mass transit industry, which has relied for years on plastic and paper-based transit cards and tickets for proof of payment, to replace these form factors with digital fare options.

The payments industry's support of Mobility-as-a-service (Maas) will be a key driver of the transit industry's long-term goal of eliminating physical transit tickets altogether, including one-time-use paper tickets or reloadable plastic fare cards, according to Nick Mackie, Visa's vice president of urban mobility and government.

The recent surge in consumer adoption of contactless and mobile ticketing during the pandemic has helped reduce the use of reloadable plastic transit cards, but the overwhelming majority of transit payments are still conducted via some kind of physical token, according to a recent report in U.K.-based journal Intelligent Transport. Even paper tickets, while biodegradable, still have significant environmental impact and cause "large amounts of waste," the report said.

Just in time for the holiday season, Best Buy is proud to announce that 100% of our gift cards purchased in U.S. stores and online are now made of paper.

That means they’re recyclable in any curbside bin — a big win for the environment. We are one of only a handful of retailers to offer customers 100% paper gift cards.

This year we will have saved more than 70 tons of plastic from landfill (that’s the weight of about 35 cars)! It’s three times as much as we saved last year, when our plastic-to-paper transition was in progress.

In addition, we reduced the size of the gift card packaging by half.

Best Buy has partnered with paper mills for years to innovate on design, materials and production. Now we have a sturdy card made of FSC-certified paper (meaning it comes from responsibly managed forests) and water-soluble glue and ink.

Of course, if you want a zero-waste gift card, consider going digital. Our e-gift cards are easy to send, and the recipient can start shopping right away at BestBuy.com.

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