New Research Identifies Untapped Customer Incentives Market for Gift Cards

Research interviews conducted with 68 customer incentive programdecision-makers within U.S. businesses of 100 or more employeesindicated that nearly 10 percent of the companies surveyed areoffering incentives for their customers. More than three quarters, 77percent, of the respondents said their incentives are geared towardcustomer retention. Just over half, 51 percent, said customeracquisition was a key objective.

Of the companies offering some form of customer incentive, 40percent are using gift cards most often, second only to product orservice discounts at 52 percent. Twenty-nine percent said that theirprimary use of gift cards was for the consumer market, while roughlythe same number (28 percent) said their primary audience for gift cardincentives was for the business-to-business market. The remaining 43percent split their use of gift cards as incentives among consumersand other businesses equally.

"This is very good news for merchants and service providers acrossa multitude of industries," said First Data Prepaid Services VicePresident of Global Marketing, Karen Larsen. "Our ongoing consumerresearch, coupled with gift card industry sales, have proven thatconsumers crave the convenience, flexibility and choice offered bygift cards. We have now identified yet another untapped market forbusinesses to reach out to their customers with a product that is wellknown, well accepted and well used."

According to the companies surveyed, the most popular gift cardsgiven as customer incentives are for:

-- Sit-down/table service restaurants, 67 percent

-- Specialty stores, 56 percent

-- Department stores, 45 percent; and

-- Large, discount stores, 40 percent.

Similar to ValueLink's 2004 Corporate Incentive research, the 2005Customer Incentives research showed a strong interest by incentivedecision makers in expanding use of gift cards for customers in thecoming year. Twenty percent of the companies currently offering giftcard customer incentives said they will increase use in the comingyear, and 52 percent of all companies surveyed said they are likely touse gift cards as customer incentives in the coming year.

Top reasons for the strong interest in gift cards are similar toprevious ValueLink studies:

-- Easy/convenient to give and use

-- Valued and seen as a good reward

-- Strength in meeting customer relations objectives

"Favorable consumer response to gift and spending cards continuesto drive opportunities for the prepaid industry," said Ed Labry,president First Data Prepaid Services. "While we've enjoyed tremendousgrowth throughout the past decade, we will continuously and carefullylisten to our retail, restaurant, employer and banking clients, aswell as their customers, as we expand the horizon for these products."

Data for First Data Prepaid Services' Customer Incentives Researchwas collected in April 2005 and is viewed as directional in nature.Interviews were completed with manager or higher level individuals insales, marketing or human resources who are responsible for makingincentive program decisions in companies with 100 or more employees.

About First Data

First Data Corp. (NYSE: FDC) is a leading provider of electroniccommerce and payment solutions for businesses and consumers worldwide.Serving 4.1 million merchant locations, 1,400 card issuers andmillions of consumers, First Data powers the global economy by makingit easy, fast and secure for people and businesses around the world tobuy goods and services using virtually any form of payment. Thecompany's portfolio of services and solutions includes credit, debit,private-label, smart and stored-value card issuing and merchanttransaction processing services; money transfer services; moneyorders; fraud protection and authentication solutions; check guaranteeand verification services through TeleCheck; as well as Internetcommerce and mobile solutions. Western Union and its subsidiary,Orlandi Valuta, together make up one of the world's largest moneytransfer networks with approximately 233,000 Agent locations in morethan 200 countries and territories. The company's STAR Network offersPIN-secured debit acceptance at 1.7 million ATM and retail locations.For more information, visit www.firstdata.com.

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