In the 20 years since the debit card was first introduced in the UK, card payment has transformed the way we shop. For the past two years, cards have been more popular than cash as a means of payment, while the explosive growth of the Internet as a retail medium has been entirely dependent on the ability to make card transactions. Today, the card is evolving and the barriers between card types are beginning to come down as financial services providers make use of cards to differentiate and add value to a broad range of other product offerings. Other competitors are lurking in the wings too – the Internet has spawned its own payment schemes, some of which are coming into more widespread use. Banks, merchants and consumers are also engaged in a struggle between the desire to minimise costs and the need to run schemes profitably.

This report examines the changing credit and debit card market. It looks at the effects of regulation, technological change and the wider economic environment on the habits of card users. The size of the card market is assessed by the number, value and type of transactions undertaken. The battle against fraud is assessed. The strategies adopted by the main providers to maintain and improve both their market share and reduce their exposure to credit risk are outlined. Finally, Mintel – having commissioned consumer research exclusively for the purposes of this report – has drawn on its research to understand and analyse the behaviour and attitudes of consumers toward card use, their loyalty to particular brands and their concerns about debt, fraud and privacy.