1. Summary of the context and overall objectives of the project (For the final period, include the conclusions of the action)
1.1. What is the problem/issue being addressed?
Two main problem areas are being addressed:
1. Vouchers & Coupons
There is a well-established history of retail vouchers and coupons exchanged for goods or cash. Typically offered on paper, they have suffered from fraud and low redemption rates, uncertain outcomes and poor information about progress. There are also environmental impacts from using paper and ink, together with severe operational risks in the collection and transportation of vouchers. These issues have caused operators to limit the value of traditional vouchers and still operational costs are relatively high
2. Pre-paid payment cash cards
These are redeemed for cash at ATM machines and very expensive to operate because they use physical cards that must be managed and they are tied to banks and therefore their associated fee structures.
The answer to these issues is offered by the i-movo Platform in the form of the Secure Digital Voucher and associated (patented) use of debit/credit card payment networks and retail Electronic Point of Sale (Epos) terminals. Formed in 2003, i-movo is an established, profitable, UK business with international potential, operating the dominant UK platform that issues & processes transactions for ‘Secure Digital Vouchers ’. The i-movo Platform enables redemption of vouchers for goods, service credits and cash at 65,000 locations throughout the UK - bypassing banks, post offices and ATM networks.
The i-movo platform has proven that it’s Secure Digital Vouchers offer significant advantages in cost, anti-fraud measures, instant control and detailed real-time information.
It avoids the environmental and operational risk concerns associated with paper.
The facilities provided by the i-movo Platform are provided in the form of a number of market offerings that are disruptive in that they bypassing banks, reduce the cost of operation and provide real-time tracking information and control over the operation:
1. The redemption of vouchers for goods in support of a marketing campaign by a Fast Moving Consumer Goods (FMCG) company, promoted through a variety of media and redeemed in convenient locations such as supermarkets, local stores and petrol refuelling stations.
2. The redemption of vouchers for cash and utility credits (gas/electricity) at supermarkets and convenience stores in support of local government who provide emergency help to vulnerable people in need.
3. The redemption of vouchers for newspapers as a result of a subscription to that publication
1.2. Why is it important for society?
A number of UK Government Departments use i-movo Secure Digital Vouchers to provide emergency assistance to people and families in need and to issue the UK HMG Department of Energy Climate Rebate. Emergency assistance vouchers are redeemed in any of 65,000 local convenience stores throughout the UK for cash or as service credits for essential utilities (electricity and gas suppliers). The operation of the scheme carries no fraud and is both efficient and cost effective.
Retailers benefit from an easy to operate scheme that encourages visits by customers and additional spend by customers during those visits. This is particularly effective for local convenience stores. Convenience stores in UK are under increased pressure from the big supermarket chains as they have introduced local “Express” stores. In Germany the convenience stores have seen a dramatic reduction in market share. The UK convenience store sector has seen benefits from marketing campaigns using i-movo in increased customer visits, expenditure and reduced banking charges for physical cash deposits. It is expected that the convenience stores in Germany will also see similar value and benefit to their businesses, in turn providing services to the local community.
Marketing campaigns by FMCG companies are much more cost effective, free from fraud and yield real-time information about the success of a campaign and provides the ability to change a campaign during its operation. The success of i-movo enabled marketing campaigns creates opportunities for FCMG companies and retailers – especially for convenience stores.
To support this the i-movo Platform is integrated at over 65,000 UK retail locations, where the system has processed more than 17m transactions, worth over €300m in transaction value. The Platform is integrated with epay, PayPoint and Payzone payment network processing systems.
There is also a considerable environmental burden from the use of paper coupons that are inevitably to be thrown away. The use of digital vouchers removes the need for paper, ink and the cost of disposal and associated environmental impact.
1.3. What are the overall objectives?
The overall objectives of this exercise is to undertake an investigation, feasibility study & technical planning that validates and informs a business plan for expansion beyond the UK into EU member States and to expand the capabilities of the i-movo Platform itself to be able to efficiently address those new markets and provide innovative services.
The business objective of i-movo is investigate the feasibility and plan for an expansion of turnover to 20 million. The output of this phase of the activity is a feasibility study and a business plan including a comprehensive technical plan. The feasibility study includes how supermarkets and FMCG retailers work across the European market; the payment networks operating across Europe; identifies up to 4 EU member states where an expansion would create a significant contribution to revenues; and the regulations around payment networks/rails across these 4 EU member states (including Data Privacy, Money Laundering and the EU Financial Services Passport arrangements).
1.4. Conclusions
The UK continues to constitute a market with substantial opportunities for growth. Four EU member states were identified as good candidates for expansion. Each country will require a similar focus to the UK and a number of them offer similar levels of growth opportunities. This study has been useful in focusing attention on the key ingredients to success, the identification of the most attractive countries in the EU for expansion and confirmation of the technical projects required to be successful.
The study has highlighted unexpected information such as the differences in implementation of EU Directives in each country. The expectation was of regulations being uniformly applied across the EU, but the directives permit enhancements, local variations and subsequent changes to legislation, sometimes not requiring further legislation but under the control of departments of government in that state. This adds to the requirement for professional advice - that of analysis and continuous monitoring of regulations in each country, in addition to the requirements we will have for other legal and tax advice. If such regulatory comparison and monitoring services were done once at the state level, then this would remove a large burden of duplicated costs from the thousands of firms operating across different EU States.
The study leads us to conclude, our intuition was correct, that the markets in the member states of the EU cannot be approached as a unified, single entity just as the UK cannot. Indeed our clients , partners and retailers are each organised and operate on a country by country basis. However, the availability of the new projects such as self-service campaigns and the in depth data analysis & investigation modules will also form unique propositions for each of the markets in member states. The exception is the financial services passport arrangements for our status as a payment processor. The passport is an extremely useful EU-wide facility for i-movo, however, there are also a variety of FMCG operators, some local, some international but even they operate on a country by country basis. There are a variety of payment network operators, although we already count Euronet/epay as our partner and a major advantage as we proceed into Europe. In the newspaper subscriptions market, it is clear this is a country by country effort just as it is in the UK. The protections that the company have from worldwide patents and strategic alliances will continue to reserve the
mechanisms we use for i-movo services to ourselves throughout the European Union.
The passport arrangements for our status as a payment processor are an important aspect of any expansion into Europe. We would rely upon the UK registrations and how this might change over the next two years is an open question. We could seek registration in another country in order to proceed.
The management of the company will continue to concentrate resources upon the home, UK, market and may seek a further grant under the EU Horizon 2020 programme to help prepare the way for an expansion of operations into the EU. The company may also seek external capital to execute the business plan, indeed there are already substantial
opportunities evident outside of Europe that will require considerable time and cash commitments.
The company therefore sees value in beginning a phase of expansion into the EU and may seek sponsorship of activities through Phase Two of Horizon 2020 and then on to Phase Three of operations (for which Horizon 2020 does not offer funding).
We thank the members and officers of the European Union Horizon 2020 programme, the feasibility study has been a most useful exercise in understanding more of the value and activities required of us to engage and expand from the UK into other countries of the European Union.
