North American incentive spending showing recessionary trends, according to Scotiabank and Berkeley Payment Solutions



    
    Companies moving away from incentive travel and merchandise to prepaid
    incentive cards to avoid perception of extravagance
    

    TORONTO, June 9 /CNW/ - In a joint analysis of millions of dollars of
spend on Visa(*) prepaid incentive cards across North America (from the first
quarter of 2008 to the first quarter of 2009), Scotiabank(R) and Berkeley
Payment Solutions uncovered a number of trends particular to difficult
economic times.(1)
    Fast food restaurants are proving their value as people more than doubled
their spending (+107%) during the period. Conversely, spending at home
furnishing and equipment stores is down by almost half (-44%), as consumers
chose to purchase household essentials at discount stores (+37%), drug stores
and pharmacies (+26%) and grocery stores (+20%). Although department store
spending has also declined (-35%), spending at family clothing stores (+79%),
men and women's clothing stores (+37%), and women's ready to wear stores
(+33%) are up significantly as individuals focus on stretching their dollars
as far as possible.
    "Our analysis shows that it is now more difficult than ever to anticipate
the type of incentives that will successfully motivate individuals," explains
David Eason, President of Berkeley Payment Solutions. "Further, as economic
conditions worsen, spending migrates towards day-to-day necessities such as
groceries or clothes instead of non-essential items such as luxury vacations
or big screen televisions. What's more, of the millions of dollars analyzed,
no single merchant category accounted for more than 8% of the total incentive
spend - underscoring the fact that it is impossible to anticipate each
individual's choice of rewards."

    
    Companies moving from incentive travel and merchandise to prepaid
    incentive cards to avoid perception of extravagance
    

    Another significant industry shift resulting from the economic downturn
is that companies across North America are turning away from luxury travel and
high-end merchandise and towards prepaid cards as they try to find less
conspicuous ways to reward employees, customers, and partners. In its October
2008 outlook study of incentive industry trends for 2009, the U.S.-based
Incentive Research Foundation found that more than three-quarters of survey
respondents (78%) believe the economy will have a negative impact on incentive
travel programs in 2009, while over half of the respondents (58%) expect
incentive travel budgets to decrease. In addition, nearly half (49%) of
respondents believe the economy will have a negative impact on their ability
to plan and implement merchandise non-cash incentive programs in 2009.(2)
    What's more, by October 2008, a significantly greater percentage of
respondents (75%) said that their company was sensitive enough to perceptions
of program extravagance to change the types of awards they use - while just a
month earlier, only 45% were considering altering their incentive programs.
Prepaid cards are being seriously considered as alternatives, with 24% of
respondents reporting that they expected to use them more in the future.
    "At a time when so many people are being asked to do with less, companies
need to be sensitive to how they reward their employees," explains Eason. "As
a result, many companies are moving away from rewarding individuals with
highly visible luxury items that are typically part of travel and merchandise
incentive programs. They are doing so to both avoid the perception of
extravagance and to allow individuals to choose the rewards that are most
appropriate to their current needs."

    Prepaid incentive opportunity continues to grow

    "Prepaid incentive cards have rapidly emerged as a preferable means of
rewarding employees versus traditional, paper-based methods," explains Brian
Triplett, Head of Global Prepaid, Visa Inc. "As companies search for
cost-effective alternatives to manage and deliver reward and incentive
programs, they are realizing one of the best ways to motivate employees is to
give them the flexibility and choice offered by a Visa prepaid incentive card.
And with more and more businesses embracing prepaid cards as an efficient
means of delivering incentives, the prepaid incentive card segment is poised
for strong industry growth."

    Flexibility and choice critical to motivating during a downturn

    Ultimately, providing cardholders with the flexibility and choice to
redeem their rewards anyway and anywhere they want is the ultimate win-win
situation during a recession. People are motivated by choice and the current
economic downturn has affected that choice. People are buying more household
necessities instead of discretionary or luxury items, which makes Visa prepaid
incentive cards an ideal way for companies across North America to reward
employees, customers and partners.
    For years, Canada's largest telephone directory publisher Yellow Pages
Group (YPG) implemented regional gift card and merchandise campaigns. However,
aggregate spend was not easy to track and campaign success was difficult to
measure. Always an innovator, and attracted by program benefits, YPG launched
a new sales incentive campaign in early 2008 where its national advertising
sales representatives received a portion of their commissions via Visa prepaid
incentive cards. Sales representatives benefited from the ease and flexibility
of the program. They were also motivated to meet sales targets because they
could select their own reward. Management benefited from being able to track
the success of the campaign. They could also quantify increases in sales,
determine each incentive campaign's success and increase brand awareness by
distributing YPG-branded Visa prepaid incentive cards to each sales
representative.
    "The Yellow Pages Group program showcases the success that companies of
all size have achieved by motivating people to meet business goals with Visa
prepaid incentive cards," explains Rubina Havlin, Managing Director, Credit
Cards, Scotiabank. "The many benefits associated with giving people the
flexibility and choice to redeem rewards however and whenever they want have
quickly transformed these cards into the incentive and reward solution of
choice across the country."

    About Berkeley Payment Solutions

    Berkeley Payment Solutions delivers innovative Visa prepaid card programs
and services to companies across North America seeking proven cost-effective
payment solutions that extend their company's brand and resonate with
employees, customers, and partners. While reducing the complexity and cost of
implementing incentive, reward, and rebate programs, Berkeley harnesses the
universal acceptance, security and functionality of a Visa prepaid card. For
further information, visit www.berkeleypayment.com.

    About Scotiabank

    Scotiabank is one of North America's premier financial institutions and
Canada's most international bank. With more than 69,000 employees, Scotiabank
Group and its affiliates serve approximately 12.8 million customers in some 50
countries around the world. Scotiabank offers a diverse range of products and
services including personal, commercial, corporate and investment banking.
With more than $509 billion in assets (as at January 31, 2009), Scotiabank
trades on the Toronto (BNS) and New York Exchanges (BNS). For more information
please visit www.scotiabank.com or www.scotiacapital.com.

    About Visa Inc.

    Visa Inc. operates the world's largest retail electronic payments network
providing processing services and payment product platforms. This includes
consumer credit, debit, prepaid and commercial payments, which are offered
under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys
unsurpassed acceptance around the world, and Visa/PLUS is one of the world's
largest global ATM networks, offering cash access in local currency in more
than 170 countries. For more information, visit www.corporate.visa.com.

    
    (1)  Analysis conducted by Scotiabank and Berkeley Payment Solutions in
         April 2009 of aggregate quarterly spend across different merchant
         categories for over 5,000 Visa prepaid incentive cards issued by
         Scotiabank and used over a 15-month period from the first quarter
         of 2008 to the first quarter of 2009.

    (2)  "Pulse Survey: The Incentive Industry Trends Outlook for 2009",
         Incentive Research Foundation, October 2008.

    (TM) Trademarks of the Bank of Nova Scotia. (R) Registered trademarks of
         the Bank of Nova Scotia. (*) VISA Int./Lic. User The Bank of Nova
         Scotia.
    




For further information:

For further information: Andrea Lekushoff, Broad Reach Communications,
(416) 435-2569, alekushoff@berkeleypayment.com

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BERKELEY PAYMENT SOLUTIONS

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