Welcome. Natasha Toothill VA Chair Chair’s News Round

Welcome

Natasha Toothill

VA Chair

Chair’s News Round

Retail Week

Park Group lifted as cautious shoppers save for Christmas

Asda Business Rewards launch on line system to allow top up of Asda gift cards

VRL KnowledgeBank- new research

76% aware of gift cards 60% purchased gift card in the last 12 months 50% said they would reload their prepaid card 50% use prepaid cards for internet purchases Other uses include budgeting, money transfer,

parents buying teen cards

Compiled online by British Market Research Bureau

Paybefore

California Mall Abandons Plastic Gift Cards for Paper

VA members 3V and G-T-P named in The Paybefore ‘Top Companies To Watch’

Sharper Image bankruptcy – Ramifications for the Gift Card industry

Retail Gift Card Alliance (VA USA)

This holiday, gift cards may go towards gas, food (Reuters/Archstone consulting USA)

Grass Roots strengthens US division (Sales Promotion magazine)

House of Fraser vouchers now redeemable on line (Sales

Promotion magazine)

Theatre Tokens join Leisure Vouchers (Sales Promotion magazine)

Sainsbury launches gift card and gains additional press with the marketing initiative ‘Meal Ticket’

Coinstar announces partnership with UK first on line gift card centre www.thegiftcardcentre.co.uk

Serious interactive gift cards sign licence agreement for UK and Europe with 4logic media

Promotions & Incentives magazine

Employee Motivation Survey

Annually every June 200 employees

questioned

How long until you spend your voucher or gift card?

0% 10% 20% 30% 40% 50% 60%

Big Treat

Hardly Ever

Eventually

Immediately

2008

2007

Source: Promotions & Incentives

When you spend, do you add your money?

Source: Promotions & Incentives

What type of vouchers do you give?

0% 20% 40% 60% 80%

Retail Store

Experinces

Other

2008

2007

Source: Promotions & Incentives

Paper or Plastic?

Source: Promotions & Incentives

Payment Services Directive

Meeting held with UK government Treasury department, attended by: Robert Courtneidge – Salans Arun Glendinning – B&Q Ray Brash – PPT Tessa Kelly – British Retail Consortium Graham Sellers – Asda Business/Jordan Media Andrew Johnson - VA

Results of Meeting

Payment Services Directive starts November 2009 Big issue for VA is definition of ‘Restricted Network’ PSD cannot operate in our market without the E-Money

Directive EMD is yet to be timetabled, could be 2009 Definitions in PSD are likely to be copied into EMD

Good News?

Payment Services Directive

Current – an emoney licence is required to operate most restricted and open loop gift card programs

Group retailers sell and redeem each others cards

Gift Cards between companies

Current Retailer A sells gift card in

London, redeems in Dublin store

Issue: Dublin is owned by Retailer A (Ireland) Ltd, London owned by Retailer A (UK) Ltd

Issue and redemption is between two difference parties so emoney applies

Gift Cards between companies

Current Retailer A sells gift card in

London, redeems in Dublin store

Issue: Dublin is owned by Retailer A (Ireland) Ltd, London owned by Retailer A (UK) Ltd

Issue and redemption is between two difference parties so emoney applies

New Directive Proposal Emoney will not apply Closed loop program ‘Commercial agreement

between two companies’ ‘Restricted Network’

Gift Cards between franchises

Current Franchisee A sells branded gift

card, franchisee B redeems branded gift card

Issue: Even though to the consumer the brand is the same franchisee A has no company relationship with franchisee B

Issue and redemption is between two difference parties so emoney applies

Gift Cards between franchises

Current Franchisee A sells branded gift

card, franchisee B redeems branded gift card

Issue: Even though to the consumer the brand is the same franchisee A has no company relationship with franchisee B

Issue and redemption is between two difference parties so emoney applies

New Directive Proposal Emoney will not apply Closed loop program ‘Commercial agreement

between two companies’ ‘Restricted Network’

Gift Cards between companies selling same product rangeCurrent Company Z sells petrol,

company X sells petrol, company Z sells gift card, gift card redeemed by company X. Both companies take part in the National Petrol Gift Card Scheme

Issue and redemption is between two difference parties so emoney applies

Gift Cards between companies selling same product rangeCurrent Company Z sells petrol,

company X sells petrol, company Z sells gift card, gift card redeemed by company X. Both companies take part in the National Petrol Gift Card Scheme

Issue and redemption is between two difference parties so emoney applies

New Directive Proposal Emoney will not apply Closed loop program ‘Commercial agreement

between two companies’ ‘Restricted Network’ –

companies selling the same product range, no restricted on product range or number of stores

Payment Services Directive

EMD must follow same definitions for it all to have positive effect on industry

E-vouchers (especially by mobile phone) have yet to be considered

Does this really protect the consumer – which is part of the objective?

Only guidelines and UK Treasury interpretation of the directive – see Treasury website or contact VA office for link

Harmonisation of VAT on vouchers and gift cards

EC voucher proposals update Impact of other changes/proposals What does it mean for you? Other UK developments Questions?

Overview

A Commission priority since 2000 Public consultation December 2006 - May 2007 Issues remain:

Divergence of treatment between different Member States Cross border treatment Growing use of vouchers and gift cards ECJ referrals not providing clarity

Scope: ‘voucher’ defined widely

EC proposal - vouchers

Voucher = supply of a separate right Must relieve the supply from VAT

levying VAT where none due on final consumption double taxation

Definitions okay Single Purpose Voucher – limited use Multi Purpose Voucher – disregard supplies other than redemption

UK intermediary rules unnecessarily complex and burdensome

Vouchers acting as general payment services should be exempt

EC consultation – Va submission

Start by harmonising current VAT treatment Proposed voucher definitions are inadequate Distribution chain must be specifically addressed Unredeemed vouchers should be relieved from tax Premium rates: depends on underlying contracts MPV v means of payment: neutrality between ‘innovative

general payment schemes’ and traditional payment schemes is fundamental

EC consultation – initial conclusions

Commission meeting to agree way forward 29 September 2008 Informal All Member States present

General agreement but many details not resolved

Commission will work on proposal

EC voucher proposals – current state

Define what is and what is not a voucher: boundary between voucher and payment instrument

Not a voucher if Open ended Cross border No entitlement to particular goods and services Not promoting particular suppliers Primary purpose test

No read across from regulatory framework

EC voucher proposals – current state

Single Purpose Vouchers A local solution – only in one Member State Know VAT rate of final goods or services Apply VAT when issue in place sold

Multi-Purpose General category Disregard issue Apply VAT when and where redeemed

EC voucher proposals – current state

Intermediaries One size fits all solution VAT applies to all supplies with a margin VAT invoices throughout the chain Would apply to all vouchers

VAT recovery: preserve status quo where supply reclassified as exempt

EC voucher proposals – current state

Desire to find a European solution

Key issues now included: Intermediaries Boundary with exemption

Limited interaction with other EU developments

Implications for UK rules for face value vouchers Surely not worse?

EC proposals – some observations

Commission now working on EC proposal Opportunities to influence Expect Com Doc early 2009 Lots to do to reach consensus Implementation unlikely to be 2010 or earlier

EC proposals – next steps

The VAT Package place of supply of services – 2010 and 2015 increased reporting obligations Impact of 2015 changes

VAT Financial services proposals definition of ‘account operation’ option to tax right to recover VAT

VAT anti-fraud proposals Other regulatory proposals

Payment Services Directive E-money Directive

Impact of other EU developments

Issuer

So what does it all mean?

IssuerIssuer

ProcessorProcessor

IntermediaryIntermediary

Processor

So what does it all mean?

ProcessorProcessor

IssuerIssuer

IntermediaryIntermediary

Intermediary

So what does it all mean?

Intermediar

y

Intermediar

y

IssuerIssuer

ProcessorProcessor

Loyalty Management UK – Nectar card Baxi Total Boots ‘Voupons’ Leisure Pass Prince Karunaraina Samarappuli Arachchige

Other UK case developments

EC voucher proposals Impact of other changes/proposals What does it mean? Other UK developments

Summary

Any questions?

You Gov & VAVoucher and Gift Card Research 2008

Denise Porter Andrew Johnson

Prepared by VA for members Prepared by VA for members

Background

Exec agreed to repeat 2007 YouGov research and also to do the Giftex Prepay research to create a year on year view

The presentation today is the YouGov results, the Giftex Prepay results will be available just before Christmas with a full presentation at February Members Meeting

This data is only available to members, it is not for use in press releases unless permission is given by YouGov

Press statements will be available to members once YouGov have signed off – expected mid October

If you have a specific question not answered please pose question to Andrew and he will check the data and come back with an answer

Data Tags

Total base, 2167 Gender – Male/Female split Age split – 18-24, 25-34, 35-44, 45-54, 55+ Social Grades – ABC1, C2DE Geography – London, Rest of South, Midlands &

Wales, North England, Scotland 7 questions asked

Research Facts

Carried out September 2008 (8th to 10th) On line survey, part of YouGov omnibus Total sample size 2167 UK adults Age range 18 to 55+ GB representative split men and women (48% vs. 52%) Includes vouchers & gift cards given as gifts by friends &

family (excludes from employers or incentives)

45% 43%

70% 69%

Given Received

Gift Card

Gift Voucher

Gender Split

More women (76%) than men (63%) give gift vouchers 49%of women have given a gift card 34% of men have given a gift card 73% of women have received a gift voucher, 66% of men 50% of women have received a gift card, 36% of men Only 8% of women and 16% of men have never received or

given a gift voucher or card

Age Splits

Given Voucher

54%

70% 72% 73% 72%

18 - 24 25 - 34 35 - 44 45 - 54 55+

Given Gift Card

44%

55%

48%

41%

32%

18 - 24 25 - 34 35 - 44 45 - 54 55+

Age Splits

Received Voucher

77% 77%71%

64% 64%

18 - 24 25 - 34 35 - 44 45 - 54 55+

Received Gift Card

59% 61%

50%

35%29%

18 - 24 25 - 34 35 - 44 45 - 54 55+

The Regions

Residents of Yorkshire & Humberside, South East and the East of England are most likely to give gift vouchers and gift cards

People of the North East are least likely to have given or received a gift voucher or gift card

The North West is the most popular region for gift card giving

Yorkshire & Humberside is the most popular gift voucher giving region

E–Vouchers / Digital Vouchers

Only 9% of sample have given an e-voucher Only 14% have received an e-voucher 81% have neither given or received an e-voucher Londoners are more likely to give an e-voucher West Midlands are more likely to receive and e-

voucher

Acceptability of Gift Vouchers & Gift Cards

Are Acceptable Gifts

85%

80%

89%

All Men Women

Are Not Acceptable Gifts

10%

14%

7%

All Men Women

Acceptability

As with previous research, women find gift cards and vouchers more acceptable as a gift than men

In England, northerners see vouchers and gift cards as more acceptable than Southerners (e.g.75% Londoners compared to 90% Yorkshire & Humberside)

35 – 44 year olds and 55+ find them more acceptable (88% and 87%), compared to 78% of 18 -24 year olds

We like Gift Vouchers & Cards because…….. Top reason is Choice – 84% 70% feel it gives the recipient a start towards

purchasing something at a higher price 56% feel they avoid upsetting the recipient 36% give vouchers and gift cards because it

shows they care Sample asked about last 12 months

These gifts are perfect for me...

Almost 2 out of 3 (63%) people felt gifts purchased for them were perfect

Over half 18 – 24 year olds (58%) thought gifts purchased for them were perfect

Those in the North East were happiest with their gifts (68%)

Those in London were least happiest with their gifts (60%)

Women were slightly more happy with their gifts than men (65% compared to 61%)

Sample asked about last 12 months

Would you have selected the gift yourself? Over one in four gifts (29%) received would

not have been the choice of the recipient 18 – 24 year olds were least likely to be

satisfied with their gifts 12% of the sample have exchanged a gift

received Sample asked about last 12 months

Propensity to Purchase a Gift Voucher or Gift Card

32%

13%

55%

More Likely Less Likely No Difference

Comparison to this year from last year

Preference to Gift Vouchers & Gift Cards v’s Gift 60% prefer a gift 40% prefer a gift voucher or card

35 – 44 year olds and 55+ have a higher preference for gift vouchers & cards than any other age groups (45%)

18 – 24 year olds have least preference for gift vouchers & cards (75% gift, 25% voucher / card)

In the North West virtual even split between vouchers & cards v’s gift

Londoners least likely to want vouchers & cards v’s gift (33% vs. 57%)

2007 v’s 2008 Comparisons

Giving and receiving of gift vouchers & cards similar results There is a 3% increase in the giving of e-vouchers: from 6%

to 9% Acceptability levels have decreased by 5%: 90% to 85% Choice remains the top reason for giving Gift exchange data shows similar results 32% are more likely to give a gift voucher / card in 2008,

compared to 31% in 2007

2008 v’s 2007 – Vouchers and Cards v’s Gifts

40% 39%

60% 61%

2008 2007

Prefer a Voucher /Card

Prefer a Gift

Conclusions

The general public view of gift vouchers and gift cards is virtually the same in 2007 as in 2008

Increased awareness of gift cards is not having a measured effect on propensity to purchase

Round Table Discussion

Further questions ask Andrew First 2 weeks of November Denise and Yvonne will

be hosting round table discussion to go through research in more detail.

2 hours over sandwich lunch, approx 10 places available. If first one is a success more will be planned.

Perhaps a round table in the north?

IRI Data Summary

Q1 data now available in charts Q2 data released to Issuer members yesterday Q2 data tracks same trends as Q1 Q3 data to be collected (Jul-Sept) Data is owned by the Issuer member of The VA

and copyright remains with the Issuer members

Background to data analysis

One of the key objectives of The VA is to gather & collate industry data.

Every new member has to submit historical sales data for the last three years.

The VA has collated data on behalf of members for over 6 years to build a picture of the market & help assess trends for the future.

Product Areas

VA members issue the following products:

Paper based gift vouchers Closed loop gift cards E-vouchers Open loop (Mastercard, Visa & Amex) prepaid cards Restricted loop prepaid cards

Notes: these are not mutually exclusive with members issuing any number of the above

Sales By Product – Total Sales

Paper50%

Gift Cards50%

Sales By Product

Paper82%

Gift Cards18%

CorporateCorporate

Paper24%

Gift Cards76%

ConsumerConsumer

Headlines

Total Sales – gift cards 50%, paper vouchers 50% Direct Sales – gift cards 76%, paper vouchers 24% Corporate Sales – gift cards 18%, paper vouchers

82% Total Sales – 55% direct / consumer, 45% corporate Card Sales – 90% in store, 6% gift card centre, 4%

online / other third party Q1 2008 is up 1.4% compared to Q1 2007

Going Green

Going green is becoming more important

Part of your corporate social responsibility strategy

‘Green Conferences’ e.g. Marketing Direct Green Conference 9th November

British Retail Consortium events

Cards & Vouchers Going Green

Presentation from John Weaver – IGH Solutions

Q&A withRichard Farmer – Kalamazoo

Conference 2009

Arun Glendinning

Vice Chair – The VA

Conference 2009

Wednesday 29th April 2009 Queen Elizabeth II Conference Centre Bigger & Better space for Exhibition &

Networking Sponsorship Opportunities Now Available

Last Chance to Influence the Agenda Key note speaker from retail Technology review, the current and future market scope including paper,

plastic, contactless and mobile Learning from overseas and the need for global solutions Legal and regulatory – PCI, PSD, Emoney, VAT, Breakage Marketplace statement and VA research Business to Business Incrementality or cannibalisation – are gift cards and vouchers a true

revenue stream or simply an alternative method of payment?

Industry Events

Andrew JohnsonDirector General – The VA

Industry Events - Feedback

Prepaid International Forum AGM (25.09.08) Attended on behalf of The VA by Rachelle

Smith, Exec member

Industry Events - Feedback

Prepaid International Forum AGM (25.09.08) National Incentive Show (16-19.09.08) Call Centre Expo (16-17.09.08) BRC Dinner (24.09.08) Eye for Retail Conference (23-24.09.08)

VA endorsed events

Industry Events - Future Prepaid Awards (22.10.08)

Over 200 attendees booked VA members up for awards Places still available via The VA

VRL Prepaid Conference(22 - 23.10.08) Retail Masterclass on 22.10.08

Retail Systems Awards Dinner (29.10.08) Cartes 2008 (04-06.11.08) – Paris

Industry Events - 2009 Corporate Prepaid 09 (21.01.09)

By invitation More details to follow

Prepaid Card Expo (9 – 11.03.09) – USA VA has speaking slots Good learning from US and Europe VA organising educational trip around conference, including merchandising

visits to US stores, potentially hosted by members of the Retail Gift Card Alliance, USA

Insert YouTube Clip

Step Up To The Mic!

Share some news Product launches Ask the Exec

Over to you…………..

Step Up to the Mic ..Question

Neil George – M&S was the first person brave enough to take to the stand. He asked issuer members if they would be prepared to share IRI data. This is a question for debate for the Exec for some time. The VA will arrange for a separate roundtable debate for interested parties.