Table of Contents
Issues in the Market
-
- Key issues
- Abbreviations
Future Opportunities
-
- Nurturing a more sustainable consumer borrowing trend
- Helping communities – contactless payments in the village shop
Market in Brief
-
- Debit card purchases are growing while credit cards remain flat
-
- Figure 1: Value of transactions for UK purchases, by card type, 2004-09
- New rules for credit card providers have been announced
- Consumers remain cautious about their spending
- Innovation in the market has increased this year
- Consumers’ appetite for debt has waned
-
- Figure 2: Gross and net consumer credit lending (excluding credit cards, seasonally adjusted), Jan 2004-Mar 2010
- Visa Debit and MasterCard are the dominant schemes
- Lloyds Banking Group dominates in both markets
-
- Figure 3: Estimated market share of the top ten credit card providers* (individual brands), April 2010
- Credit card adspend has declined significantly since 2007
- Most people apply for a credit card in-branch
-
- Figure 4: Method used to apply for credit card, 2008-09
- Debit card ownership is rising, but for credit cards has remained flat
-
- Figure 5: Types of payment card owned, 2006-09
- Two fifths of consumers pay by card whenever it’s practical
-
- Figure 6: Attitudes towards different payment methods, April 2010
Internal Market Environment
-
- Key points
- Lending rates have increased despite the low base rate…
-
- Figure 7: Official end-of-month bank rate and monthly average bank and building society overdraft and credit card interest rates, January 2004-April 2010
- … but conditions may have started to improve
- Rejection rates have increased during the credit crunch
- New rules for card providers will have a big impact
- Is this the end of fee-free credit cards?
- Credit card complaints are still at record levels
- Credit card providers can expect to take a hit on PPI sales
- Measures aimed at tackling card fraud appear to be working
-
- Figure 8: Total value of plastic card fraud losses on UK-issued cards, 2005-09
- Increased competition for prime customers
- The launch of the Faster Payments Service
- The regulatory landscape
- The launch of the Lending Code
- New FSA rules on banking conduct
- The Payment Service Directive
- The new Consumer Credit Directive
- Investigation into interchange fees
Broader Market Environment
-
- Key points
- Consumer spending is a key driver of the market
-
- Figure 9: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
- High unemployment is a concern for credit card providers…
-
- Figure 10: Working age unemployment rate, seasonally adjusted, Feb 2004-Feb 2010
- … as is the rising number of personal insolvencies
-
- Figure 11: Number of personal insolvencies in England and Wales (not seasonally adjusted), Q1 2004-Q1 2010
- High inflation puts more pressure on disposable incomes
-
- Figure 12: Monthly changes in the rate of annual inflation* and Bank of England base rate (not seasonally adjusted), Jan 2004-Apr 2010
- Consumer confidence has increased, but remains low
-
- Figure 13: Monthly, 3-monthly and 12-monthly UK consumer confidence indices, January 1988-March 2010
- Consumer appetite for debt has declined
-
- Figure 14: Intended consumer credit activities, Q3/Q4 2002-Q1/Q2 2010
Competitive Context
-
- Key points
- The rise of plastic, the decline of cash and cheque use
-
- Figure 15: Share of transaction volumes, by payment type (excluding cash), 2018
- Consumer appetite for debt – what appetite?
-
- Figure 16: Gross and net consumer credit lending (excluding credit cards, seasonally adjusted), Jan 2004-Mar 2010
- Demand for unsecured personal loans remains low
-
- Figure 17: New gross unsecured loan advances – MBBG and total market, 2004-09
- Store cards and prepaid cards are other niche alternatives
-
- Figure 18: Types of payment card owned, 2004-09
SWOT Analysis
-
-
- Figure 19: Credit and debit cards – SWOT analysis, 2010
-
Who’s Innovating?
-
- Key points
- The development of contactless payments
- Several providers launch new reward schemes
- Offering current account customers a better deal
- Virgin Money launches two new credit cards
- Visa launches a new hi-tech payment card
Market Size and Forecast
-
- Key points
- Outstanding credit card balances have started to rise
-
- Figure 20: Outstanding credit card balances (seasonally adjusted), January 2004-March 2010
- Gross lending has fallen significantly since December 2007
-
- Figure 21: Gross and net credit card lending (seasonally adjusted), January 2004-March 2010
- The number of credit cards in issue fell significantly last year
-
- Figure 22: Number of payment cards in issue, by type, 2004-09
- Debit card transaction volumes are increasing by 10% every year…
-
- Figure 23: Volume of transactions for UK purchases, by card type, 2004-09
- … while growth in value terms is even more pronounced
-
- Figure 24: Value of transactions for UK purchases, by card type, 2004-09
- Credit cards tend to be used for higher value purchases
-
- Figure 25: Average transaction value (ATV) for UK purchases, by card type, 2004-09
- Debit cards are being used more and more frequently
-
- Figure 26: Average number of transactions per card for UK purchases, by card type, 2004-09
- Debit cards account for the vast majority of cash withdrawals
-
- Figure 27: Value of transactions for UK cash withdrawals, by card type, 2004-09
- More people are using their debit cards when abroad
-
- Figure 28: Summary of credit and debit card transactions outside the UK, transaction volumes, values and average transaction values, 2009
- Forecast
- Credit card growth will be fairly subdued over the next few years
-
- Figure 29: Credit cards forecast: transaction volumes, values, and average transaction value (ATV) for UK purchases, 2005-15
- The debit card market will continue to grow
-
- Figure 30: Debit cards forecast: transaction volumes, values, and average transaction value (ATV) for UK purchases, 2005-15
- Factors used in the forecast
Payment Systems Providers
-
- Key points
- Debit cards
- Visa Debit is fast becoming the dominant force in the market…
-
- Figure 31: Total debit card transaction volumes, by payment systems provider, 2004-09
- …accounting for two thirds of total debit card transactions by value
-
- Figure 32: Total debit card transaction values, by payment systems provider, 2004-09
- Credit cards
- MasterCard is the leading credit card scheme provider…
-
- Figure 33: Credit card transaction volumes for UK purchases, by payment systems provider, 2004-09
- … accounting for 63% of UK purchase transactions by value
-
- Figure 34: Credit card transavtion values for UK purchases, by payment systems provider, 2004-09
- Both Visa and MasterCard have seen a decline in cash withdrawals…
-
- Figure 35: Credit card transaction volumes for UK cash withdrawals, by payment systems provider, 2004-09
- … though Visa has seen the largest decline
-
- Figure 36: Credit card transaction values for UK cash withdrawals, by payment systems provider, 2004-09
Market Share
-
- Key points
- The large high street banks dominate the current account market
-
- Figure 37: Share of main current account-holder customer base, by banking group (top seven only), March 2010
- LBG is the leading credit card provider at group level…
-
- Figure 38: Estimated market share of credit card providers, April 2010
- … but Barclaycard still tops the list of individual brands
-
- Figure 39: Estimated market share of the top ten credit card providers* (individual brands), April 2010
Companies and Products
-
- Barclaycard
-
- Figure 40: Credit card range – Barclaycard, June 2010
- HSBC Group (including M&S Money credit cards)
-
- Figure 41: Credit card range – HSBC, June 2010
- Lloyds Banking Group
-
- Figure 42: Credit card range – Lloyds TSB, June 2010
- Figure 43: Credit card range – Halifax/Bank of Scotland*, June 2010
- MBNA
-
- Figure 44: Most popular credit card range – MBNA, June 2010
- RBS Group
-
- Figure 45: Credit card range – RBS Group, June 2010
Brand Communication and Promotion
-
- Key points
- Plastic card adspend has declined during the credit crunch
-
- Figure 46: Plastic card adspend, by sub-category, 2007-09
- American Express has significantly increased its share of voice
-
- Figure 47: Plastic card adspend, by company (top ten), 2007-09
- Direct mail accounts for over half of total sector adspend
-
- Figure 48: Plastic card adspend, by media type, 2007-09
- Plastic card adspend peaks pre- and post-Christmas
-
- Figure 49: Adspend seasonality, based on average monthly adspend over three years, 2007-09
Channels to Market
-
- Key points
- The branch is still the main method of applying for a credit card…
-
- Figure 50: Method used to apply for credit card, 2008-09
- … although online credit card applications are increasing
The Consumer – Credit Card and Debt Ownership
-
- Key points
- Around a quarter of people have outstanding credit card debts
-
- Figure 51: Types of credit on which people owe money, April 2010
- People in the family lifestage more likely to have an outstanding balance
-
- Figure 52: Types of credit on which people owe money, by demographics, April 2010
- Almost three quarters of adults have a credit card
-
- Figure 53: Types of payment card owned, 2006-09
- Multiple credit card ownership has declined slightly
-
- Figure 54: Number of credit/charge cards and debit cards owned, 2006-09
The Consumer – Card Usage and Outstanding Debt
-
- Key points
- Most people with outstanding debts owe relatively small amounts
-
- Figure 55: Total amount owed on outstanding unsecured debts, April 2010
- Most spend relatively small amounts on their credit card each month
-
- Figure 56: Average monthly credit card spend, 2006-09
- Debit cards are used much more frequently than credit cards
-
- Figure 57: Frequency of use of credit and debit cards, 2006-09
The Consumer – Choice of Credit Card Provider
-
- Key points
- Barclaycard is the leading individual credit card brand
-
- Figure 58: Who people have a credit card with, April 2010
- Lloyds Banking Group credit cards appeal more to young adults…
-
- Figure 59: Who people have a credit card with (group level), by demographics, April 2010
- … but it also attracts more C2DEs
The Consumer – Credit Card Features Desired
-
- Key points
- Customer service is key and cuts across all segments of the market
-
- Figure 60: Features desired in a credit card, April 2010
- ABC1s are particularly fussy about customer service
-
- Figure 61: Most popular features desired in a credit card, by demographics, April 2010
- The balance transfer market is centred around the less affluent
- Retailers are particularly strong when it comes to reward schemes
-
- Figure 62: Features sought in a credit card, by who people have a credit card with, April 2010
The Consumer – Attitudes Towards Different Payment Methods
-
- Key points
- Consumers like the convenience of paying by card…
-
- Figure 63: Attitudes towards different payment methods, April 2010
- …but most still use cheques occasionally
- High earners are more likely to pay for things by card
-
- Figure 64: Attitudes towards different payment methods (excluding statements on contactless payments), by demographics, April 2010
- … but will also use cheques, suggesting a more diverse approach
- Contactless payments – look to older and more affluent consumers
-
- Figure 65: Familiatrity and use of contactless payments, by demographics, April 2010
- Multiple card users are more engaged and diverse
-
- Figure 66: Selected attitudes towards different payment methods, by all attitudes towards different payment methods, April 2010
The Consumer – Target Groups
-
- Key points
- Card Lovers and Multiple Payment Users are the best target
-
- Figure 67: Attitudes towards different payment methods, by target groups, April 2010
- Affluent individuals are more likely to be Multiple Payment Users
-
- Figure 68: Target groups, by demographics, April 2010
- Card Lovers have the highest level of outstanding debt
-
- Figure 69: Total amount owed on outstanding unsecured debts, by target groups, April 2010
- Multiple Payment Users are more likely to choose a smaller provider…
-
- Figure 70: Who people have a credit card with, by target groups, April 2010
- … and are more interested in softer issues like customer service
-
- Figure 71: Features desired in a credit card, by target groups, April 2010
Appendix – Market Share
-
-
- Figure 72: Main current account provider, by individual brand, March 2009-March 2010
-
Appendix – The Consumer – Credit Card and Debt Ownership
-
-
- Figure 73: Types of credit on which people owe money, by demographics, April 2010
-
- Figure 74: Demopgraphic profile of credit card holders who have outstandiung debts on a credit card, April 2010
-
Appendix – The Consumer – Choice of Credit Card Provider
-
-
- Figure 75: Who people have a credit card with (group level), by demographics, April 2010
-
- Figure 76: Who people have a credit card with (individual brands), by demographics, April 2010
-
- Figure 77: Who people have a credit card with (individual brands), by demographics, April 2010 (continued)
-
Appendix – The Consumer – Credit Card Features Desired
-
-
- Figure 78: Features desired in a credit card, by demographics, April 2010
-
- Figure 79: Features desired in a credit card, by demographics, April 2010 (continued)
-
Appendix – The Consumer – Attitudes Towards Different Payment Methods
-
-
- Figure 80: Attitudes towards different payment methods, by demographics, April 2010
-
- Figure 81: Attitudes towards different payment methods, by demographics, April 2010 (continued)
-
Appendix – The Consumer – Target Groups
-
-
- Figure 82: Target groups, by demographics, April 2010
-
Back to top