1. Welcome

2. Natasha Toothill VA Chair

3. Chair’s News Round

4. 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

5. 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

6. 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)

7. 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)

8. 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 www.thegiftcardcentre.co.uk Serious interactive gift cards sign licence agreement for UK and Europe with 4logic media

9. Promotions & Incentives magazine Employee Motivation Survey Annually every June 200 employees questioned

10. How long until you spend your voucher or gift card? Source: Promotions & Incentives

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

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

13. Paper or Plastic? Source: Promotions & Incentives

15. 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

16. 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?

17. 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

18. 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

19. 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’

20. 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

21. 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’

22. 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

23. 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 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

24. 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

25. Harmonisation of VAT on vouchers and gift cards

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

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

37. Issuer So what does it all mean? Issuer Processor Intermediary

38. Processor So what does it all mean? Processor Issuer Intermediary

39. So what does it all mean? Intermediary Issuer Processor

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

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

42. Any questions?

44. You Gov & VA Voucher and Gift Card Research 2008 Denise Porter Andrew Johnson Prepared by VA for members

45. 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

46. 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

47. Research Facts Carried out September 2008 (8 th to 10 th ) 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)

49. 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

50. Age Splits

52. 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

53. 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

54. Acceptability of Gift Vouchers & Gift Cards

55. 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

56. 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

57. 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

58. 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

59. Propensity to Purchase a Gift Voucher or Gift Card

60. 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%)

61. 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

62. 2008 v’s 2007 – Vouchers and Cards v’s Gifts

63. 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

64. 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?

65. 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

66. 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.

67. 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

68. Sales By Product – Total Sales

69. Sales By Product Corporate Consumer

70. 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

72. Going Green Going green is becoming more important Part of your corporate social responsibility strategy ‘Green Conferences’ e.g. Marketing Direct Green Conference 9 th November British Retail Consortium events

73. Cards & Vouchers Going Green Presentation from  John Weaver – IGH Solutions Q&A with  Richard Farmer – Kalamazoo

75. Conference 2009 Arun Glendinning Vice Chair – The VA

76. Conference 2009 Wednesday 29 th April 2009 Queen Elizabeth II Conference Centre Bigger & Better space for Exhibition & Networking Sponsorship Opportunities Now Available

77. 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?

79. Industry Events Andrew Johnson Director General – The VA

80. Industry Events - Feedback Prepaid International Forum AGM (25.09.08) Attended on behalf of The VA by Rachelle Smith, Exec member

81. 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

82. 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

83. 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

84. Insert YouTube Clip

85. Step Up To The Mic! Share some news Product launches Ask the Exec Over to you…………..

86. 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.