First Data Advisors Adds Midyear Gift Card Update and Explanation of IRS Merchant Tax Reporting to its Growing Series of Syndicated Analyses

ATLANTA, Sept. 27, 2011 – First Data Corporation, a global leader in electronic commerce and payment processing, today introduced two new research analyses in its growing series from First Data Advisors, the custom analytics and consulting unit of First Data Global Information and Analytics Solutions. Advisors’ “2011 Midyear Gift Card” update and an analysis of the new IRS reporting requirements entitled, “Mastering Form 1099-K,” are now available to merchants, financial institutions and other businesses interested in deep and actionable interpretation as well as advice on these topics.

2011 Prepaid Midyear Gift Card Performance Update
The prepaid gift card market remained healthy in the first half of 2011, experiencing a higher rate of growth than U.S. consumer spending despite the sluggish macroeconomic environment. That’s one finding of a new analysis on the U.S. gift card market from First Data Advisors. Using actual point-of-sale data from First Data’s proprietary SpendTrend^® database, the 2011 Prepaid Midyear Gift Card Performance Update found that gift card activation volume increased 8.8% --- nearly a percentage point more than overall consumer spending volume on credit, debit, and Electronic Benefit cards for the same period.  Despite the fragile state of the U.S. economy, the average per card amount activated on gift cards expanded 6.1% in the first half of 2011. This reversed the prevailing trend in the last six months of 2010 where gift card activations declined on a year-over-year basis. This report also analyzes key emerging trends within the gift card space, laying out recommendations for merchants seeking to align themselves for the future of gift card purchasing and distribution.

Mastering Form 1099-K—Assessing Merchant Impacts and Opportunities from the Upcoming IRS Reporting Requirements
New Internal Revenue Service (IRS) merchant reporting requirements, as outlined in Section 6050W of the Internal Revenue Code, will soon face many merchants and the vendors that serve them. As of the New Year, reporting entities that qualify as either the payment settlement entity or the electronic payment facilitator are required to gather additional data related to merchant payments on the businesses they serve. Starting in 2012, reporting entities will file this data with the IRS and distribute a new document—Form 1099-K—to impacted merchants. This new reporting form will show total gross reportable sales  for payment card and third party network transactions in calendar year 2011 and each year thereafter. This analysis considers in detail the requirements of the introduction of Form 1099-K, the processes underway to assist merchants in preparing, as well as the expected and unexpected implications of this change for merchants and their payment processing partners. It also includes recommendations that will help merchants make the most of this requirement, above and beyond the basic tax reporting requirements.

“Our latest research analyses bring to light the challenges of a continually changing payments landscape and why it’s imperative for both merchants and financial institutions to stay on top of these trends. Through this detailed analysis, First Data Advisors provides the tangible market intelligence needed to effectively respond to the issues that impact their day-to-day business decisions the most,” said Silvio Tavares, SVP and division manager of First Data Global Information and Analytics Solutions.

These new analyses are part of a series of syndicated research that has been developed thus far in 2011. Two other research analyses already released in the market include examination of the “Rebirth of Credit” and a “Post-Recession Analysis.”

Rebirth of Credit – Minus the Debt: Profitability Strategies and the New American Consumer
Since the beginning of 2011, consumers have begun to spend using their credit cards again. An analysis of First Data SpendTrend data shows that year-over-year credit card dollar volume surpassed that of signature or PIN debit in February 2011. This shift marked the first time in over two years that credit card dollar volumes had surpassed debit. First Data Advisors believes that this return to credit reverses a move away from credit cards and toward signature and PIN debit, which was first noted as the “Great Recession” unfolded. At that time, U.S. shoppers sought to pare down their debt, relying instead on ready cash to fund their purchases. To determine whether this shift is the result of a temporary change or the return to a more “normal” payment environment, First Data conducted an analysis leveraging unique, proprietary intelligence on consumer buying behaviors based on actual transaction data.

Post-Recession Analysis: Grocery Industry Average Ticket Still Suffering
The Business Cycle Dating Committee of the National Bureau of Economic Research announced in September 2010 that the economic recession that began in December 2007 had ended in June 2009. This represented the longest recessionary period the U.S. has experienced post-World War II. Despite early hopes that the end of the recession would unleash pent-up demand for goods and services, the U.S. has experienced a slow and bumpy road to economic recovery. Grocery merchants are still feeling the effects of the dramatic change in consumer behavior caused by the recession, the credit crisis and the sluggish post-recession recovery. Same store average tickets, a measure of the total dollar volume divided by total transaction volume, continued their overall decline through October 2010.

Each of the full research analyses is currently available for purchase from First Data Advisors. For more information, please contact Customer Care at 1-800-430-0169 or visit www.firstdata.com/infoanalytics. To participate in the SpendTrend conversation, please follow First Data at http://twitter.com/FirstData and join us at http://on.fb.me/spendtrend.

Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive customer revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction.

Media Contact
Elizabeth Grice, First Data
303-967-8526
elizabeth.grice@firstdata.com