A presentation by Andrew Johnson, CEO National Gift Card Corp, Europe, at the 6th International Gift Card and Couponing Summit in Frankfurt (September 2015).

1. Gift Cards, Vouchers & Digital
UK & USA Trendsetters

2. Andrew Johnson
CEO
National Gift Card Corp Europe
Who am I and what qualifies me to be here?

3. • Over 15 years’ experience
• Started ‘voucher’ career at Virgin Group
• Former Director General, UK Gift Card & Voucher
Association
• Worked on gift card, voucher and digital
programmes for the likes of Starbucks, Primark,
TK Maxx, National Trust, Argos
Andrew has been a
judge on various
awards including the
Paybefore Awards
USA & Europe
For 10 years Andrew
owned his own gift
card consultancy
practice
Andrew’s ‘worst’ gift
card moment was a
live interview on the
BBC consumer
programme,
‘Watchdog’
In 2015 Andrew was
awarded the
UKGCVA ‘Hall of
Fame’ Award
Why me?

4. • National Gift Card Corporation (NGC) originated
in Chicago in 2004
• One of the leading US agencies providing gift
card solutions
• Branches in Canada and Europe
• NGC created ngcEurope in September 2014
• NGC offers products and services to clients
across the world
In November 2014
ngc USA loaded its
one billionth dollar
onto a gift card
ngcEurope launched
its first end to end
digital gift card in
November 2014 for
The National Trust
ngc USA currently
offers over 130
Digital Gifts, with
more added every
month
Over 60 European
incentive agents
work with ngcEurope

5. White-Label Gift Card, Voucher
& Digital Solutions for Brands
Providing one or more of these services
• Sales & marketing of your branded gift cards
& digital to businesses on your behalf -
representation
• Creation and management of the branded
gift card website for B2B and / or B2C sales
• B2B fulfilment of gift cards & digital
• B2C fulfilment of gift cards & digital
• Customised, detailed finance and sales
reporting
A One-Stop Shop for a
Range of Gift Cards & Digital
Codes

6. Industry Insights
The facts from the USA and the UK

7. Products
• Gift Vouchers and Gift Cards
• Retailers / issuers own gift cards or vouchers.
• Tender Types (pre paid cards)
• Many of the incentive agencies now offer their own card and gift voucher, examples include the
p&mm Spree card and the Grass Roots Pure card along with the Grass Roots Bonus Bond
(voucher) and the Edenred Capital Bond (voucher). These are redeemable at a number
retailers and are accepted by retailers as a tender type and are recorded as such through EPOS
systems. A number of new opportunities are emerging in this prepaid card sector. This type of
prepaid card are likely to be utilised by loyalty scheme providers (particularly in the finance
sector) over the coming years. Cards will use ‘ride the rails’ of Visa or MasterCard.
• E-vouchers & M-vouchers
• Emerging as the next big innovation in the industry, e-vouchers available to download from
websites and m-vouchers which are delivered via mobile phones either through SMS, MMS or
applications for iPhones and Android handsets. In the USA the surge in mobile vouchers has
been driven via consumers, in the UK it is the B2B sector that is the catalyst for growth.
7

8. Closed loop gift cards,
vouchers & digital
2015
Approx. revenues:
USA $313bn
UK £5.4bn

9. In Store Sales
Web Sales
B2B Sales
Gift Card Malls
Core Sales Channels

10. In Store Sales
USA $91.bn
UK £2.2bn
2015

11. B2B
On average 25% sales
in the USA are B2B

12. Web Sales
15% increase in
sales of plastic gift
cards or vouchers
via a website first
half 2015
Online gift card
sales remain strong
but real divergence
into digital means
online becomes
essential

13. Gift Card Malls
22% increase in
sales of plastic gift
cards via gift card
malls first half 2015
Mall sales starting to
plateau with ‘near
saturation’ of market

14. Paper v Plastic v
Digital
Real move to digital,
virtually no paper

15. Business to Business
Breaking it down

16. £2.2bn B2B opportunity
According to the UK Gift Card & Voucher
Association (UKGCVA) in 2014 the UK
market for gift cards and gift vouchers was
worth £5.4bn. 50% of this revenue was gift
cards and vouchers sold to companies for
business use including staff motivation,
employee benefits, consumer loyalty reward
programmes, insurance replacement and
Christmas savings clubs.
The chart shows the industry percentage breakdowns by sector
of the business to business sales.
IM – Incentive & Motivation (staff)
SP – Sales Promotion (consumers)
SD – Staff Discounts & Affinity Groups
Flex – Flexible Benefits
IR – Insurance Replacement
Save – Christmas Savings Club
LV – Legislative Vouchers
Industry%
IM
SP
SD
Flex
IR
Save
LV
Source: UKGCVA

17. Stakeholders
Who does what?

18. Retailers
(Issuers)
Distributers
Processors
Printers
Networks
Stakeholders
B2B Incentive Agents
Fulfilment Agents
Gift Card Malls

19. Gift Card
Digital
Voucher
Method of
Payment
Marketing
Tool
Retailers
(Issuers)
or

20. Gift Card
Digital
Voucher
Method of
Payment
Marketing
Tool
Manged by
Finance
Managed by
Marketing
“In the USA and UK the retailers who are most
successful in gift cards are those who assign
gift cards to their marketing team”

21. Distributers
B2B Incentive Agents Fulfilment Agents Gift Card Malls
Summary Offer range of incentive and
motivational services for
employees and consumers
Dedicated fulfilment services
for gift cards, vouchers &
digital
Range of gift cards sold
in store and on line on
retailers
Key Benefits to
clients
• Manage the whole end to end
programme from design to
execution
• Gift cards only small part of
their offering
• Hold stock of cards and
codes so no need for
client to hold stock
• Systems and processes
for easy distribution
• Dedicated services
• API to API services for
greater efficiencies
• Gives great choice to
customers
• Revenue generation
for host retailer
• Usually managed by
third party who take
care of end to end
process
Examples Grassroots
Edenred
BI Worldwide
NGC
SVM
Voucher Express
Blackhawk
InComm
ePay

22. Distributers
B2B Incentive Agents Fulfilment Agents Gift Card Malls
Commercial
Model
• Make money from the full
range of services they offer
• Gift cards are almost a ‘sell
through’ – if they can make
margin they will but generally
commercial model is based on
management fees from clients
• Make money from charging
delivery and management
fees
• Buying from retailers at a
discount or commission and
reselling at high price is
essential part of model
• Make money from
charging commissions
to those cards sold on
the malls
• Additional revenues
from marketing fees etc
Opportunities
& Risks
• Potential to drive significant
volumes
• May offer their own multi-
choice product either as an
exchange model or full open or
restricted loop programme
• In this service orientated
world easy way for retailers,
agents and corporates to take
advantage of dedicated
systems and processes
• Need to drive volume to make
money as low margins
• Diversification into new
sectors such as B2B
offering fulfilment
services from their
range of gift card stocks
• Too greater range of
services offered
• Saturation of the GCM
sector in some countries
Personal
Future
Predictions
• Will continue to grow,
globalisation of employee
based schemes potential
opportunity for international
expansion
• Real scope for world wide
distribution, particularly digital
• Greater diversification
and consolidation in this
sector
• Greatest scope for
offering worldwide
services from one
supplier
Key Trends

23. Distributers
B2B Incentive Agents Fulfilment Agents Gift Card Malls
Commercial
Model
• Make money from the full
range of services they offer
• Gift cards are almost a ‘sell
through’ – if they can make
margin they will but generally
commercial model is based on
management fees from clients
• Make money from charging
delivery and management
fees
• Buying from retailers at a
discount or commission and
reselling at high price is
essential part of model
• Make money from
charging commissions
to those cards sold on
the malls
• Additional revenues
from marketing fees etc
Opportunities
& Risks
• Potential to drive significant
volumes
• May offer their own multi-
choice product either as an
exchange model or full open or
restricted loop programme
• In this service orientated
world easy way for retailers,
agents and corporates to take
advantage of dedicated
systems and processes
• Need to drive volume to make
money as low margins
• Diversification into new
sectors such as B2B
offering fulfilment
services from their
range of gift card stocks
• Too greater range of
services offered
• Saturation of the GCM
sector in some countries
Personal
Future
Predictions
• Will continue to grow,
globalisation of employee
based schemes potential
opportunity for international
expansion
• Real scope for world wide
distribution, particularly digital
• Greater diversification
and consolidation in this
sector
• Greatest scope for
offering worldwide
services from one
supplier
Key Trends
European Trend Difference!
Cost plus models, very
little discounting or
commission

24. Diversification
The paper voucher becomes the gift card, becomes the digital
code and opens up opportunities for non-traditional high street
retailers

25. A One-Stop Shop for a
Range of Gift Cards & Digital
Codes
Restaurants
Entertainment
Online only
stores
Experiences/
Days Out
Holidays &
Travel
Gift Cards are no longer exclusive
to high street retailers

26. Inhibitors – negative trends!
Lots of opportunities in the gift card market – life is good then?

27. Inhibitors – negative trends!
Regulation
• VAT
• Payment
Services &
Emoney Directive
• Local regulation
• Escheatment
• Frank Dobson
• State Regulation

28. Inhibitors – negative trends!
Culture
• Diverse gift
giving trends
• Slow progress of
digital
• Awareness of
environmental
issues re plastic
• Much more open
to cash based
gifts
• Digital adoption
high
• Little regard for
environmental
issues

29. Inhibitors – negative trends!
Gift Card Exchange
• Several entrants
to the UK market
but, to date, most
have failed
• Retailers see
exchange sites
as negative to
their brand
• Exchange sites
accepted as part
of overall offering
• Some retailers
embracing the
trend and supply
additional stock –
just another sales
channel

30. Inhibitors – negative trends!
Mobile
• 96% of digital
vouchers printed
to take to store
• Feel the trophy
value of a printed
piece of paper
• Retailers’ tills
cannot accept
mobile
redemption
• Mobile more
readily available
• Retailers’ tills still
inhibitor
• More open to
hand keying
numbers

31. Innovation & Consolidation
Key trends from USA and UK

32. Innovation
• New technology brings new
opportunities
• Innovation in service and
delivery
• Payment innovation create grey
lines between open & closed
loop, gifting & payments
• No longer just for the high street
retailer
• Be innovative in commercial
models – margins are tight!
Consolidation
• The world is shrinking, great
opportunities for global services
and offers
• Making money is a challenge in
gift cards, margins are tight,
need volume sales
• Third parties moving in to
capture gift card mall, B2B and
exchange opportunities
• Regulation cannot be ignored,
EU or US wide

33. Thank You
Andrew Johnson
CEO
NGC Corp Group Europe Limited
(NGC Europe)
Tel: 01344 987907
Mob: 07904 994104
Email: andrewj@ngc-group.co.uk
NGC Corp Group Europe Ltd, 2 The Braccans, London Road, Bracknell, Berkshire, RG12 2XH