Coinstar Inc UK Gift Card Voucher Association

							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?

 Immediately


  Eventually

                                                         2008
  Hardly Ever                                            2007


    Big Treat


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


                                                                Source: Promotions & Incentives
When you spend, do you add your money?




                               Source: Promotions & Incentives
What type of vouchers do you give?


       Other



  Experinces                                  2008
                                              2007

  Retail Store


                 0%   20%   40%   60%   80%


                                                     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                           New Directive Proposal
 Retailer A sells gift card in    Emoney will not apply
  London, redeems in Dublin        Closed loop program
  store                            ‘Commercial agreement
 Issue: Dublin is owned by         between two companies’
  Retailer A (Ireland) Ltd,        ‘Restricted Network’
  London owned by Retailer A
  (UK) Ltd
 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
Gift Cards between franchises
Current                        New Directive Proposal
 Franchisee A sells branded    Emoney will not apply
  gift card, franchisee B       Closed loop program
  redeems branded gift card     ‘Commercial agreement
 Issue: Even though to the      between two companies’
  consumer the brand is the     ‘Restricted Network’
  same franchisee A has no
  company relationship with
  franchisee B
 Issue and redemption is
  between two difference
  parties so emoney applies
Gift Cards between companies
selling same product range
Current
 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 range
Current                        New Directive Proposal
 Company Z sells petrol,       Emoney will not apply
  company X sells petrol,       Closed loop program
  company Z sells gift card,    ‘Commercial agreement
  gift card redeemed by          between two companies’
  company X. Both
                                ‘Restricted Network’ –
  companies take part in the
  National Petrol Gift Card      companies selling the same
  Scheme                         product range, no restricted
                                 on product range or number
 Issue and redemption is
                                 of stores
  between two difference
  parties so emoney applies
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
Overview
   EC voucher proposals update
   Impact of other changes/proposals
   What does it mean for you?
   Other UK developments
   Questions?
EC proposal - vouchers
   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 consultation – Va submission
   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 – initial conclusions
   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 voucher proposals – current state
   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 proposals – some observations
   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 – next steps
   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
Impact of other EU developments
   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
  So what does it all mean?

               Issuer
  Issuer




                   Processor




Intermediary
  So what does it all mean?
               Processor
  Issuer




                    Processor




Intermediary
  So what does it all mean?

               Intermediary
  Issuer




                      Processor




Intermediary
Other UK case developments
   Loyalty Management UK – Nectar card
   Baxi
   Total
   Boots ‘Voupons’
   Leisure Pass
   Prince Karunaraina Samarappuli Arachchige
Summary

   EC voucher proposals
   Impact of other changes/proposals
   What does it mean?
   Other UK developments
Any questions?
          You Gov & VA
Voucher and Gift Card Research 2008



         Denise Porter
        Andrew Johnson


                         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)
      70%         69%



45%         43%
                        Gift Card
                        Gift Voucher




 Given      Received
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                                  Given Gift Card
                    72%       73%       72%              55%
          70%
                                                                   48%
                                               44%
54%                                                                          41%
                                                                                       32%




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

                Received Voucher                             Received Gift Card

77%       77%                                   59%       61%
                     71%
                               64%       64%                        50%

                                                                              35%
                                                                                        29%




18 - 24   25 - 34    35 - 44   45 - 54    55+   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                         Are Not Acceptable Gifts
                                   89%
                                                               14%

85%
                                             10%

                                                                               7%
                80%




      All             Men            Women         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
                                              55%




        32%



                           13%




         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
                  60%         61%



         40%                        Prefer a Voucher /
                        39%
                                    Card
                                    Prefer a Gift




           2008           2007
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




Gift Cards                 Paper
   50%                      50%
Sales By Product

             Corporate                        Consumer

Gift Cards                                               Paper
   18%                                                    24%




                         Paper   Gift Cards
                          82%       76%
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 with
     Richard   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 Johnson
Director 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.