Table of Contents
Issues in the Market
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- Main issues
- Abbreviations
Insights and Opportunities
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- Younger consumers still represent an untapped opportunity
- Older consumers
- Dormant cards
- Popularity of debit cards and death of the cheque
Market in Brief
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- Debit and charge cards are the success stories of 2007…
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- Figure 1: Volume of payment cards in issue (m), by type of card, 2002-07
- The move to a cashless society continues
- …and signs of a slowdown in credit card switching?
- Economic environment affecting consumers…
- Contactless cards – the latest innovation
- Traditional players retain their dominant position
- Debit cards starting to replace cash
- Driving frequency of use…
- …and minimising switching
Fast Forward Trends
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- Trend 1: Cool Vending
- Building technology into the everyday
- If even vending machines can change…
- …then why not the flexible friend?
- Trend 2: No Middleman
- Cutting out the middleman
- Can the card market go against the flow?
- The custom card?
Internal Market Environment
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- Key points
- The credit crunch has had a significant impact on the credit card market
- Lenders tighten criteria further
- Debt levels continue to rise, but so do repayment intentions
- Growth in basic bank accounts as financial inclusion improves
- Growing number of people concerned about finances
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- Figure 2: Concerns about social issues amongst UK consumers, November 2007
- Payment card fraud transaction volumes are on the increase
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- Figure 3: Volume of fraudulent transactions, by type of card, 2001-07
- The value of fraudulent activity is also rising…
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- Figure 4: Value of fraudulent transactions, by card type, 2002-07
- …although recorded cases of identity theft have declined in 2007
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- Figure 5: Number of reported cases of identity theft, 1999-2007
Broader Market Environment
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- Key points
- Low predictions for GDP growth
- Inflation is above government target…
- …and the RPI has increased…
- …leading to pressures on budgets
- Unemployment has increased slightly over the last quarter but down over the year
- Confidence slumps to levels of early 1990s
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- Figure 6: Consumer confidence barometer, June 2007-08
- Millions cutting back on food and family treats as credit crunch bites
- Overall internet penetration rises slightly
- Consumers look to save money by trimming back insurance policies
- PPI investigation to have an impact on margins?
Competitive Context
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- Key points
- Continuing decline of the cheque
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- Figure 7: Volume of cheque and plastic card transactions, millions, 2002-07
- The store card market continues to shrink
- Borrowing on overdrafts has stabilised following a period of growth
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- Figure 8: Total borrowing on overdrafts, £ blillion, 2002-07
- Remortgaging remains flat and is likely to do so given the availability of mortgage funds
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- Figure 9: Value of remortgaging, £ millions, 2002-07
- Decline in the size of the personal loans market
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- Figure 10: Unsecured personal loans, £ billions, 2002-07
Strengths and Weaknesses in the Market
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- Debit cards
- Strengths
- Weaknesses
- Credit cards
- Strengths
- Weaknesses
Who’s Innovating?
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- Key points
- Contactless cards still a niche market…
- …but considerable development activity
- Prepaid cards are growing in popularity
- Green and ethical cards
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- Figure 11: Green and ethical credit card schemes
- The mobile phone is the new wallet?
Trade Perspective
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- Key points
- The economic climate and impact of the ‘credit crunch’
- Could tightening conditions change card usage patterns?
- Strategies to combat customer churn
- Protecting margins in a fiercely competitive market
- Future trends and product innovation
Market Size and Forecast
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- Key points
- Credit card borrowing remains flat in 2007
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- Figure 12: Credit card borrowing, £ billion, 2002-07
- Payment card growth remains relatively flat for the third year in succession
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- Figure 13: Number of payment cards in issue, by type, 2002-07
- Transaction volumes remain level…
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- Figure 14: Volume of UK purchases, by card type, 2002-07
- …although values increased further in 2007
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- Figure 15: Value of UK purchases, by card type, 2002-07
- Average purchase values remain relatively high
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- Figure 16: Average purchase value, by card type, 2002-07
- Debit cards are used most frequently
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- Figure 17: Card usage frequency for purchases in the UK, by card type, 2002-07
- Forecast
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- Figure 18: Forecast of credit cards: Total value and volume of purchases, 2003-13
- Average expenditure on credit cards to peak in 2008/ 09
- Forecast reflects tightening budgets
- Debit cards winners in current climate
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- Figure 19: Forecast of debit cards: total value and volume of purchases, 2003-13
- Factors used in the forecast
Segment Performance
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- Key points
- Debit cards
- Visa debit the market leader
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- Figure 20: Debit cards in issue, by scheme, 2002-07
- Debit card transaction volumes continue to grow…
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- Figure 21: Debit card transaction volumes, by scheme, 2002-07
- …as do debit card transaction values
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- Figure 22: Debit card transaction value, by scheme, 2002-07
- Scope to encourage debit card usage for smaller purchases
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- Figure 23: Debit card average transaction values, by scheme, 2002-07`
- Cash acquisition continues to grow
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- Figure 24: Debit card cash acquisition, by scheme, 2002-07
- Credit cards
- MasterCard shows the strongest growth
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- Figure 25: Credit and charge cards in issue, by scheme, 2002-07
- Overall transaction volumes remain flat in 2007…
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- Figure 26: Credit and charge card transaction volumes, by scheme, 2002-07
- …as do overall purchase volumes
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- Figure 27: Credit and charge card purchase volumes, by scheme, 2002-07
- Credit and charge card purchases increase in value
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- Figure 28: Credit and charge card purchase values, by scheme, 2002-07
- MasterCard and Visa on a par for average values
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- Figure 29: Average credit and charge card purchase values, by scheme, 2002-07
- Cash acquisition on credit and charge cards is increasingly unpopular
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- Figure 30: Credit and charge card cash acquisition volumes, by scheme, 2002-07
- Figure 31: Credit and charge card cash acquisition value, by scheme, 2002-07
Spending Behaviour
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- Key points
- Food and drink account for the largest volumes of purchases
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- Figure 32: Credit and debit card purchase volumes, by sector, 2007
- The value of purchases on debit cards is higher than on credit cards across all sectors
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- Figure 33: Credit and debit card purchase value, by sector, 2007
- Hotels and travel – the big-ticket buys
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- Figure 34: Average value of purchases, by sector, 2002-07
- Credit cards are still favoured for overseas use
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- Figure 35: Summary of credit and debit card transactions outside the UK, annual transaction value and volume, 2007
Market Share
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- Key points
- Debit cards
- The ‘Big Five’ have maintained market leadership
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- Figure 36: Volume share of current account market, March 2006-August 2007
- Credit cards
- Despite strong competition, the ‘Big Five’ also dominate credit cards
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- Figure 37: Provider share, by brand, April 2008
Companies and Products
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- Key points
- Incremental revenue opportunities sought by credit card providers
- Loyalty schemes vs. lower APRs
- Company profiles
- Barclays/Barclaycard
- Lloyds TSB
- GE Money
- HSBC
- MBNA
- Capital One
- Egg/Citigroup
- RBS Group plc
Brand Communication and Promotion
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- Key points
- Cards a key advertising sector…
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- Figure 38: Proportion of advertising expenditure, by financial sector, 2007/08
- …and credit cards lead the way
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- Figure 39: Plastic card advertising expenditure, by type of card, 2006/07 and 2007/08
- Direct mail still the key channel
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- Figure 40: Credit card adspend, by outlet, 2007/08
- The majority of brands are spending less on the marketing of credit cards…
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- Figure 41: Credit card adspend, by provider, 2006/07 and 2007/08
- …reflecting a difficult market
- Brand positioning
- Playing the green card?
Brand Elements
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- Brand Map
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- Figure 42: Attitudes and usage of credit card brands, May 2008
- Capital One
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 43: Attitudes towards the Capital One brand, May 2008
- Barclaycard
- What the brand is trying to achieve.
- What the consumer thinks
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- Figure 44: Attitudes towards the Barclaycard brand, May 2008
- Egg
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 45: Attitudes towards the Egg brand, May 2008
- Brand Qualities of credit card brands
- High street brands most competent
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- Figure 46: Personalities of various credit card brands, May 2008
- Experience of credit card brands
- Barclaycard and Capital One most used brands
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- Figure 47: Consumer usage of various credit card brands, May 2008
- Brand intentions for credit card brands
- Barclaycard best retention; Amex least relevant
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- Figure 48: Consideration of various credit card brands, May 2008
- Brand momentum for credit card brands
- Capital One gaining ground with Virgin?
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- Figure 49: Momentum of various credit card brands, May 2008
- Brand satisfaction for credit card brands
- HSBC keeping its customers happy
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- Figure 50: Satisfaction with various credit card brands, May 2008
- Brand commitment to credit card brands
- Few would pay more for their card
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- Figure 51: Commitment to various credit card brands, May 2008
- Round up
The Consumer – Credit Ownership and Brand Share
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- Key points
- Credit ownership
- Credit cards the most common form of unsecured debt
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- Figure 52: Forms of credit held, April 2008
- Almost a third have a mortgage…
- …but they’re outnumbered by unsecured borrowers
- ABC1s remain the key target market
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- Figure 53: Types of outstanding debt held, by gender and socio-economic group, April 2008
- The consumer credit generation
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- Figure 54: Types of outstanding debt held, by product type and age group, April 2008
- Paying the price for family life
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- Figure 55: Types of outstanding debt held, by product type and lifestage, April 2008
- Brand share
- High street banks dominate
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- Figure 56: Credit card ownership and provider share, April 2008
- Half of cardholders don’t carry a balance
- US operators account for a fifth of cards
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- Figure 57: Provider share, by type of lender, April 2008
- ABs share their business around
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- Figure 58: Provider share, by gender, age, socio-economic, marital status, lifestage and Mintel’s Special Groups, April 2008
- Assessing priorities
- As income increases, so does multiple ownership
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- Figure 59: Provider share, by working status, household income, tenure, region and ACORN group, April 2008
- Sainsbury’s and Tesco – converting customers?
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- Figure 60: Provider share, by media and supermarket usage, April 2008
The Consumer – Credit and Debit Card Usage
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- Key points
- Debit card usage
- Debit cards – replacing cash as well as cheques?
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- Figure 61: Debit card usage, April 2008
- Who is driving the cashless economy?
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- Figure 62: Debit card usage, by gender, age, socio-economic group, marital status, lifestage and Mintel’s Special Groups, April 2008
- Low earners facing financial exclusion?
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- Figure 63: Debit card usage, by working status, household income, tenure, region and ACORN group, April 2008
- Virtual lives – virtual cash?
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- Figure 64: Debit card usage, by media and supermarket usage, April 2008
- Credit card usage
- Debit cards still the everyday option
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- Figure 65: Credit card usage, April 2008
- Two in five clear their balance every month
- Time to concentrate on rewards?
- Affluent retirees rarely borrow money from month to month
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- Figure 66: Credit card usage, by gender, age, socio-economic group, marital status, lifestage and Mintel’s Special Groups, April 2008
- Squeeze on incomes could see soaring bad debt
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- Figure 67: Credit card usage, by working status, household income, tenure, region and ACORN group, April 2008
- Tabloid readers reacting to high charges?
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- Figure 68: Credit card usage, by media and supermarket usage, April 2008
The Consumer – Credit Card Switching and Selection
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- Key points
- Card switching activity waning?
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- Figure 69: Credit card switching behaviour, 2006-08
- Older cardholders show greater degree of loyalty
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- Figure 70: Credit card switching behaviour, by gender, age, socio-economic group, marital status, lifestage, Mintel’s Special Groups and working status, April 2008
- Lower earners playing safe and sticking with their existing provider
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- Figure 71: Credit card switching behaviour, by household income, tenure, TV region and ACORN group, April 2008
- The risk of online switchers
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- Figure 72: Credit card switching behaviour, by media and supermarket usage, April 2008
- Most are happy with their existing card
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- Figure 73: Credit card selection and borrowing, April 2008
- Satisfaction with existing credit cards is relatively high
- Less affluent show signs of dissatisfaction
- Pre-/no family respondents shop around for the best deal
- Working status leading to credit confidence
- More savvy – or simply just more creditworthy?
- Clear regional differences
- Targeting opportunities
- Three in ten cardholders have multiple accounts
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- Figure 80: number of credit cards held, Among whole sample and among credit card holders, April 2008
- High earners share their business around
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- Figure 81: Attitudinal groups crossed with gross household income, April 2008
- Three key target groups
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- Figure 82: Attitudinal groups among Credit card holders, April 2008
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- Figure 83: Attitudes to credit cards among key target groups, April 2008
- ‘Always paid’ – happily oblivious to their interest costs
- ‘High users’ – the researchers
- ‘Extra source’ – struggling to make ends meet
- What are the triggers for shopping around for an additional card?
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- Figure 84: Attitudinal groups crossed with number of cards held, April 2008
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