Welcome

1. Welcome

2. Welcome – New Members • Murray Scott – Buropak • Steve Hattersley & John Bottreill – Cognitronics • Stephanie Wilson – SK Chase • Rob Frome & Fatima Wessom – New Look • Nicky Tollafield – Shoe Vouchers • Carly Wickenton & Nick Warren – Starbucks • Cassandra Cavanah - SpaFinder

3. Welcome – Guests • John Gaukroger – Joe Browns • Debbie Hughes – Ten Pin • Dominic Peachey – Financial Services Authority • Diane Jackson - BAUGUR Group • Susi Pink - Lavish

4. Membership • Issuers - 40 • Service – 38 • 78 total New Members • Murray Scott – Buropak • Steve Hattersley & John Bottreill – Cognitronics • Stephanie Wilson – SK Chase • Rob Frome & Fatima Wessom – New Look • Nicky Tollafield – Shoe Vouchers • Nick Warren – Starbucks • Ken Pearceson – Royal Mail • Kevin Turnbull & Cassandra Cavanah – Spa Finder

5. New Executive Natasha Toothill – payzone (S) - Chair • Arun Glendinning – B&Q (I) - Vice Chair • Philip Shelley – Voucher Central (S) • Yvonne West – Sainsbury’s (I) • Caroline Watson – Voucherline (S) • Rachelle Smith – PPT (S) • Denise Porter – Treatme.net (I) • John Davis – Argos & Homebase Business Solutions (I) • Bill Alexander – Red Letter Days (I)

6. Cabinet Roles Regulation & Legal – John Davis PR & Research – Yvonne West & Denise Porter Liaison with other Associations & Membership Development & Recruitment – Rachelle Smith & Bill Alexander Finance & Constitution – Philip Shelley Social Events & Marketing (web, exhibitions) – Caroline Watson Conference – Arun Glendinning (Vice Chair) Secretariat Liaison – Natasha Toothill (Chair)

7. Achievementsmembership year 2007/08 Natasha Toothill

8. Highlights Increased membership Refreshed Aims & Objectives

9. Aims & Objectives Promoting the use of vouchers and gift cards to business and consumers Enhancing the standing and raise the profile of our industry, internally and externally through leadership and advocacy Provide a forum for networking, training, events, best practices, information and education Addressing consumer and regulatory issues relating to the industry

10. Highlights Increased membership – Should be 100 in 2009 Refreshed Aims & Objectives Networking & Communication – meetings, social events, Voom!, BRC dinner, members website Research – YouGov, Giftex Prepay PR – day-to-day, Christmas activity, Negative press at Christmas Speaking opportunities – NIS, PME, Retail Industry Forum, Prepaid Expo, Gift Cards Europe Marketing – consumer website Legal – VAT, Fraud, Royal Mail, FSA Industry data – change in IRI data Conference – increase in delegates Liaison with other associations – PIF, BRC, MAA

11. New Fee Structure Social membership phase out All members (Issuers & Service) pay same membership fee - £2200 + VAT Complementary place at conference for all paid up members Fee of £800 for Issuer members to collate IRI data (reduction of £50 on last year) Only paid up members will be eligible to attend meetings, social events and vote

12. The Future of The VAfive year plan The Executive

13. Five Years Ago 31 members (Full members £2600, Associate £1000) Exec included: Sainsbury’s, M&S, High Street Gift Vouchers, Arcadia Group, Virgin, Capital Incentives. Debenhams had launched gift card

14. Research Networking PR Marketing Website Special offers Conferences Exhibitions Tax updates Legal advice Market news Newsletter Market stats Education Training Lobbying What do you want from the VA? Budget of £180k pa to manage VA activities gets you:

15. Doubled membership again in 5 years What would budget of £300 000 buy you?

16. Do we? • Increase the membership? • Stay where we are? • More social events? • Increase our lobbying power? • Offer market specific training? • Try to change consumer buying habits? • Self regulation? • Network new markets? • Create member forums to share issues? • To be the market spokesman for prepaid? • Grow awareness in the B2B market? • Pack it all in……?

17. What do YOU want from the VA over the next 5 years? Brainstorm these areas in 3 groups • Ask yourself: • What are your 3 main requirements this year from the VA? • In 2013 – what should the VA be offering members? • Which areas of membership need to be developed? • How do we categorise our members?

18. Brain Storming results – What VA members would like to see in 08/09 • It was agreed that increasing the membership is key, encouraging the missing large retailers to join, but that we do not grow too big that we dilute the message of the VA, we should enrich rather than simply enlarge membership • Up to date Legal Issues and a snapshot of how it applies to our market • Lobbying – Concerns on Non-redemption • Sub groups and Forums to share issues • People from outside the sphere to learn about the market • Accreditation / self regulation • Research – Consumer (YouGov) & Supplier led • Get the VA into the consumer eyes – use the Logo as a ‘Seal of Approval’ • Like to see the website used as a resource • Like to see Conference 09 address member issues – • back to the ‘dynamics in paper’ maintain a balance gift card / V • New technologies and better understanding – more education • More on prepaid • Keynote Speaker – new blood

19. Plans for 08-09 continued • Members would welcome Industry related training programmes so they could send teams of people • Voom! too big a file. Send email with link to website? • Would like to see more PR on the website • Need more instructions and procedure for negative PR to be sent to members • Good mix of priced social events, like to see more, maybe include outside of London.

20. Brain Storming 5year Plan • We should understand more of the Market, understand how the market has changed from 2007 – 2013 • Consumer Research • Education • Lobbying • Voice of the Industry • VA logo to represent ‘Seal of Approval’

21. Q&A FSA Dominic Peachey

22. LEGAL & REGULATORY ISSUES IN PREPAID The Financial Services Authority Prepaid - Q&A - Dominic Peachey, FSA

23. The Regulatory Minefield Why is the FSA addressing a retail conference? Innovative Electronic Payments Products have attracted the EU E-Money Directive (2000) Payment Services Directive (2007) Need to rationalise these two (2009) Watch this space

24. Those EU Directives: E-money directive currently in force Regulates third party pre paid Due for revision by Q2/2009 Payment Services Directive Became European law on Xmas Day Must be implemented in UK by 11/09 Will eventually absorb the revised e-money directive

25. E-money Directive If you issue a prepaid card that is not closed loop you are forced to become a financial institution (or hire a bank) The consequent regulation is prescriptive and onerous But the EU is taking a long hard look at the future of EMD and is looking to ease the burdens

26. Payment Services Directive Will apply to all payment services, not just prepaid Is more principles based and less prescriptive than EMD Contains a lot of Conduct of Business regulation Likely to be a complaints led regime Mediated by Financial Ombudsman

27. A Word On Principles Based Regulation Instead of issuing detailed rules (could encourage a box-ticking mentality) You issue a set of high level principles And switch the focus of regulation to desired outcomes Leaving Senior Management in firms with the freedom to choose how best to achieve those outcomes

28. PBR – The Example of Hong Kong The HK Monetary Authority has adopted a Principles Based regime for e-money Octopus is the ticketing system adopted by the HK Mass Transit Railway Includes Pre Pay purse which can be used outside the basic transport system

29. OCTOPUS Regulated by HKMA Code of Practice drawn up by OCL and endorsed by HKMA www.info.gov.hk/hkma/eng/bank/value_cards/code_of_practice_OCL_.pdf “manage float prudently” “back with sufficient, liquid, low risk assets” “ensure sufficient cash flow to handle daily operations”

30. By Contrast with Hong Kong… ….and its 3 golden principles… The European liquidity regime… ….as enacted by the FSA’s Handbook Runs to 17 pages of rules and guidance This is the difference between rules based and principles based regulation

31. Prepaid and E-money Most (but not all) prepaid is e-money Open, closed and restricted loops Definition of e-money Who can issue e-money? Oyster Storecards Gift cards Group Schemes and Cross Border

32. Exploring Those Loops An open loop scheme is a network branded product (VISA, Maestro &c) that may be used virtually anywhere A restricted loop implies the issuer has negotiated contracts of acceptance with a limited group of merchants A closed loop scheme is one where issue and acceptance is limited to the same person

33. Definition of E-money E-money is monetary value (as represented by a claim on the issuer) which is: Stored on an electronic device Issued on receipt of funds Accepted as a means of payment by persons other than the issuer Surrogate for coins and banknotes Not deposit taking

34. Who Can Issue Electronic Money? Banks Building Societies Specialist e-money issuers (ELMIs) Waivered firms EEA firms who passport into the UK

35. Products Which Are Not Prepaid Debit and credit cards Mobile based proximity payments Account based mobile payment schemes These products are not currently regulated But will become so from 1 November 2009

36. Oyster 2 elements – travel card and pre pay Pre pay may only be used to buy travel rights from Transport for London So it is a ticketing system and not a stored value product for paying third parties Has escaped financial regulation to date Despite extension to TOCs

37. Oyster Involves: No straight revenue pass through Discontinuity between transport services consumed by cardholder and payments received by operators Use of parallel operators to complete same journey Use of sequential operators to complete same journey Effect of daily price capping

38. Storecards Accounts mutated into charge cards and credit cards If they only operate within the one store chain, they are not regulated Intra-group and cross-border edge towards regulation Commission says storecards exempt unless co-branded with VISA or MasterCard

39. Gift Cards What exactly is a gift card? Is it a token or voucher of nominal value or Is it an electronic purse with a running balance With whom can it be redeemed? If in doubt, seek advice

40. Group Schemes and Cross Border Whether a scheme is regulated or not often hinges upon third party acceptance as payment That means legal third parties Including acceptance by subsidiaries and by other group companies This may cause problems cross border – even the Anglo-Scottish border

41. Limited Network Exclusions Article 3 (k) of PSD Excludes: limited networks of service providers limited range of goods or services Commission guidance intends the exemption of storecards, canteen cards, petrol cards, transport cards BUT

42. The Exemption Does Not Run To… Cards which can be used in a long list of big chains of merchants Because they are typically designed for a growing network of service providers Which could take them out of scope of “limited network” But shopping mall cards should be clear

43. Websites These can be virtual marketplaces So apply the same principles Can the payment instrument only be used for purchases through a specific website? Or can it be used for a certain range of goods and services offered over the Internet?

44. Questions • B&Q asked Dominic to confim the regulation of B&Q gift crads in different sceniros: • Only in B&Q stores is OK • B&Q on a Mall in another store – regulated • B&Q merged with another company on a card – regulated • PPT would like shopping centre cards regulation confirmed. • If it can only be used in the one centre it falls outside regulation. • payzone asked if the new directive will be down to legal interpretation? • Yes! FSA will give support and advice, and essentially the European Court makes the decision on how its run.

45. IRI Figures Andrew Johnson

46. Figures VA collate sales data from all members Recently reformatted data collected First draft of 2007 full year data including gift voucher, gift card and e-voucher sales

47. Paper v Plastic v E Paper 65% Gift Cards (closed, open, restricted) 32% E-vouchers 3%

48. Plastic Only Closed 97% Restricted 0.5% Open 2.5%

49. Consumer Paper 50.63% Gift Cards (closed, open, restricted) 45.05% E-vouchers 4.32%

50. B2B Paper 90.4% Gift Cards (closed, open, restricted) 9.22% E-vouchers 0.38%