Sales of gift cards are set to surpass $118bn in 2013, an increase of eight percent compared to 2012, according to a research by CEB TowerGroup.

The increase in sales of gift cards will be driven by widespread adoption of e-gifting, which is expected to help industry grow till 2016.

The e-gifting sales are expected to generate revenues of $3bn in 2013, as against $300m in 2012.

The sales of gift cards are further expected to get boosted by new P2P services offered by banks and non-traditional financial firms such as PayPal, which allows users to send gifts in real time through proprietary networks.

CEB TowerGroup senior research director Brian Riley said the gift card experience continues to get better for consumers.

"E-gifting and P2P innovations add a new dimension to the market, which means more flexibility for buyers and recipients. Those same innovations may pose a threat to the growth of traditional card volume, and issuers should remain nimble in adjusting their strategies as digital competitors continue to enter the market," Riley added.