Me2You, the gift card business partly owned by retailers in Ireland, saw sales rise 70 per cent in the run up to Christmas.
The lifting of the cap on the small benefits tax exemption scheme from €500 to €1,000 in the 2023 budget meant many employers gave their employees more valuable gift cards last Christmas, while others took advantage of the scheme for the first time.
Businessman Chris Clinch, chairman of Me2You, estimates that the market as a whole is up 25 percent, with his company gaining further market share.
He estimates that the company now owns nearly 10 percent of the business-to-business gift card market.
“Employers see it as a way to deal with the cost-of-living crisis without having to embed a pay rise”
The company estimates the total market to be worth €650m, with B2B or bulk sales of corporate gifts accounting for €350m.
The largest player in the Irish market is One4all, while a number of competitors offer corporate customers preloaded Mastercards. Large retailers such as Dunnes Stores are also targeting corporate customers, while hotel groups and shopping centers are also active in the market.
Clinch, who sold cash transit business GSLS to the Carlyle Cardinal fund in 2014, said the average purchase per employee has increased from around €250 to €360.
“We’ve seen a huge number of new customers and an expansion of our customers – where they might have given it to some teams, but now they’re giving it to everyone.”
Clinch said its largest individual enterprise customers place nearly €1 million in annual orders.
He said the company has been profitable in recent years and certainly had a good year last year.
“We also knew that we had a good chance of an increase in the allowance for small change. We planned it and talked to our major customers. But we didn’t anticipate the effects we saw. We would have hoped for an increase of 25 percent – and we have achieved almost 70 percent.”
He said growth in January exceeded expectations at around 400 percent. “It was phenomenal.”
“I have the impression that employers see this as a way of dealing with the cost-of-living crisis without having to embed it.”
This suggests that companies that don’t want to commit to pay rises see gift cards as a way to give employees a one-time financial boost.
Me2You was founded with the goal of charging lower fees than similar companies already in the market.
“Our main competitors may be operating at 9 or 10 percent, but we are operating at 5 or 6 percent.”
Me2You has campaigned for the small benefit exemption scheme to be limited to expenditure within the Irish economy as the Treasury forgoes taxes. Some cards can be issued online internationally and abroad.
Clinch said it is investing around €1m in its technology and may need to open its card to international spending to be competitive.
