Table of Contents
Issues in the Market
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- Main issues
- Abbreviations
Insights and Opportunities
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- Mass-market pre-paid
- Really green cards
- Secure debit cards
- The mortgage-backed credit card
- Would you like a goat with that?
Market in Brief
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- Card transactions worth £320 billion
- Credit card growth stalled
- Debit cards on the rise
- The fight against fraud is a war of attrition
- Marketing expenditure squeezed
- Consumer research confirms wider market trends…
- …with younger people swapping cards for cash
- The affluent making greatest use of their cards
Fast Forward Trends
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- My ads, my choice
- What's it about?
- What we've seen
- What next?
- The even-smarter card?
- What's it about?
- What we've seen
- What’s next?
Internal Market Environment
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- Key Points
- Regulation cuts profits
- The cheque is dead
- Fraud not yet under control
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- Figure 1: Summary of plastic card fraud losses, 2001-06
- Credit squeezed
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- Figure 2: Consumer debt levels, 2001-06
- Bad debt on the up
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- Figure 3: Consumer debt write-offs, 2001-06
External Market Environment
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- Key Points
- Interest rates – hurting
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- Figure 4: Bank of England base rate, RPI and real rate of interest, 1990-2007
- Consumers getting keener on saving
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- Figure 5: Total PDI, consumer expenditure and savings, 2003-12
- The economy – tougher conditions
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- Figure 6: GDP annual growth and proportion of workforce unemployed – UK, 1997-2007
- Consumers are getting cautious
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- Figure 7: Agreement with selected financial lifestyle statements, 1993-2006
- Online spending – 40% of adults now shop online…
- …but new fraud opportunities open up…
- …and new challengers enter the market
Competitive Context
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- Key Points
- Overdrafts: cheaper and more accessible
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- Figure 8: Value of overdraft advances (MBBG only), 1998-2006
- Personal loans – further signs of belt-tightening?
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- Figure 9: Gross lending on unsecured and secured personal loans, 2000-06
- Mortgage equity withdrawal popular
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- Figure 10: Gross mortgage lending, by type of advance, 1997-2006
- Store cards dying out
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- Figure 11: Store cards, number of cards in issue and number of transactions, 2001-06
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, the new wave?
- Barclaycard leads the way
- Security, cleverer ways to foil clever thieves
- Card style – what does what you carry in your wallet really say?
Trade Perspective
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- Key Points
- Debit card growth
- Debit card schemes
- The tightening credit card market
- Card security
- Innovation
- Compelling incentives
Market Size and Forecast
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- Key Points
- Number of payment cards in issue flattens
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- Figure 12: Number of payment cards in issue, by type, 2001-06
- Transaction volumes remain level…
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- Figure 13: Volume of UK purchases, by card type, 2001-06
- …while values edge up slightly
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- Figure 14: Value of UK purchases, by card type, 2001-06
- Average purchase value – room at the bottom
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- Figure 15: Average purchase value, by card type, 2001-06
- Transaction frequency – too much, too rarely?
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- Figure 16: Card usage frequency, by card type, 2001-06
- Forecast
- Debit card purchases to continue to grow…
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- Figure 17: Forecast of debit cards: number in issue, total value and volume of purchases, 2002-12
- …extending the gap between debit and credit cards
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- Figure 18: Forecast of credit cards: number in issue, total annual transaction volumes and value, 2002-12
- Factors used in the forecast
Segment Performance
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- Key Points
- Debit cards
- Steady growth in card numbers…
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- Figure 19: Debit cards in issue by scheme, 2001-06
- …while transaction numbers approach the seven million mark
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- Figure 20: Debit card transaction volumes by scheme, 2001-06
- Visa Debit continues to lead the market
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- Figure 21: Debit card scheme market share, by transaction volume, 2001-06
- Transaction values top £361 billion
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- Figure 22: Debit card transaction values by scheme, 2001-06
- Electron and Solo transactions reflect target market
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- Figure 23: Debit card average transaction value by scheme, 2001-06
- Average cash withdrawals on the up
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- Figure 24: Debit card cash acquisition value by scheme, 2001-06
- Credit cards
- MasterCard shows strongest growth…
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- Figure 25: Credit and charge cards in issue by scheme, 2001-06
- …although Visa still accounts for more transactions
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- Figure 26: Credit and charge card transaction volumes by scheme, 2001-06
- Purchase volumes approaching two billion
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- Figure 27: Credit and charge card purchase volumes by scheme, 2001-06
- Value fails to keep pace with inflation
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- Figure 28: Credit and charge card purchase values by scheme, 2001-06
- Cash acquisition falls back in 2006…
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- Figure 29: Credit and charge card cash acquisition volumes by scheme, 2001-06
- …in terms of value, as well as volume
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- Figure 30: Credit and charge card cash acquisition by value, 2001-06
- Figure 31: Credit and charge card average cash acquisition transaction value by scheme, 2001-06
- Turnover per card
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- Figure 32: Credit and charge card turnover per card, by scheme, 2001-06
Spending Behaviour
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- Key Points
- Spending by sector
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- Figure 33: Analysis of debit and credit card purchases, by sector, 2006
- Leisure drives purchasing growth
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- Figure 34: Credit and debit card spending, combined growth by sector, 2001-06
- Overseas transactions reflect travel habits
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- Figure 35: Summary of credit and debit card transactions outside the UK, annual transaction value and volume, 2006
Market Share
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- Key Points
- The big five still account for the vast majority of the debit card market
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- Figure 36: Volume share of current account market, 2003-07
- Barclays and Lloyds TSB still lead the pack
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- Figure 37: Provider share, by brand, April 2007
- Market dynamics by provider
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- Figure 38: Provider share, by type of lender, 2004-07
Companies and Products
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- Key Points
- Balance transfer cards still a key weapon…
- …but the offer has changed
- Reward schemes repositioned
- Company Profiles
- Lloyds TSB
- RBS Group
- Barclays
- HSBC
- HBOS
- MBNA
- Capital One
Brand Communication and Promotion
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- Key Points
- Credit cards account for the bulk of adspend
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- Figure 39: Plastic card advertising expenditure, by type of card, years to April 2006 and April 2007
- Debit card adspend
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- Figure 40: Debit card adspend, by outlet, year to April 2007
- Figure 41: Debit card adspend, by provider, years to April 2006 and April 2007
- Credit card adspend dominated by direct mail
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- Figure 42: Credit card adspend, by outlet, year to April 2007
- Capital One top spenders in the credit card market
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- Figure 43: Credit card adspend, by provider, years to April 2006 and April 2007
- A shift in marketing focus
Brand Elements
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- Figure 44: Usage and attitudes towards credit and debit card brands, June 2007
- The Halifax
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- Figure 45: Words associated with the Halifax brand, June 2007
- Brand qualities
- Capital One
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- Figure 46: Words associated with the Capital One brand, June 2007
- Brand qualities
- Capital One in your wallet?
- MBNA
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- Figure 47: Words associated with the MBNA brand, June 2007
- Brand qualities
- Success is getting the right customers…and keeping them
- Egg
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- Figure 48: Words associated with the Egg brand, June 2007
- Brand qualities
- Simple Relevancy
- Barclaycard
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- Figure 49: Words associated with the Barclaycard brand, June 2007
- Brand qualities
- Barclaycard – a breath of fresh air?
- Brand Qualities
- Tesco tops the most credible
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- Figure 50: Word associations with credit and debit card brands, June 2007
- Usage of brands
- Halifax and Barclaycard lead
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- Figure 51: Consumer usage of credit and debit card brands, June 2007
- Attitudes towards brands
- Barclaycard’s reputation holding it up
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- Figure 52: Attitudes towards credit and debit card brands, June 2007
- Brand satisfaction and performance
- Tesco steals excellence of satisfaction
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- Figure 53: Customer rating of credit and debit card brands, June 2007
- Brand commitment
- Halifax and Tesco are seen to have the best customer service
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- Figure 54: Degree of customer commitment to credit and debit card brands, June 2007
- Round up
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Card Ownership and Brand Shares
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- Key points
- Credit ownership – cards lead the way
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- Figure 55: Ownership of selected credit products, April 2007
- The rise of the debit card
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- Figure 56: Debit, credit and charge card ownership, 2000-07
- Under 25s shunning credit cards?
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- Figure 57: Debit, credit and charge card ownership, by gender and age, April 2007
- Most affluent most likely to have a credit card
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- Figure 58: Debit, credit and charge card ownership, by affluence and lifestage, April 2007
- Established players under increasing pressure
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- Figure 59: Provider share, by brand, 2004-07
- The big five continue to dominate…
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- Figure 60: Provider share, by type of lender, 2004-07
- …particularly among younger cardholders
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- Figure 61: Credit card brand share, by gender and age, April 2007
- Women and families turn to retailers
- ABs defect to the US operators
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- Figure 62: Credit card brand share, by socio-demographic group, April 2007
- Internet users and young people also more likely to venture away from traditional providers
Card Ownership and Brand Shares – Detailed Demographics
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- Card ownership
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- Figure 63: Card ownership, by socio-demographic group, April 2007
- Brand share
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- Figure 64: Credit card brand share, by socio-demographic group, April 2007
Card Usage
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- Key points
- Debit card usage – replacing cash, or supplementing it?
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- Figure 65: Attitudes towards cash and debit cards, April 2007
- Debit card usage skewed towards younger consumers and high earners
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- Figure 66: Most popular attitudes towards cash and debit cards, by gender, age, socio-economic group and lifestage, April 2007
- Ladies get their cashback
- Cards replacing cash for younger consumers?
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- Figure 67: Next most popular attitudes towards cash and debit cards, by gender, age, socio-economic group and lifestage, April 2007
- Consumers reining back credit card borrowing
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- Figure 68: Plastic card usage, by socio-demographic group, April 2007
- Responsible credit card usage
- Online usage – under threat from a reduced appetite for debt?
- Providing Incentives
- The young and the cardless
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- Figure 69: Most popular attitudes towards plastic card usage, by socio-demographic group, April 2007
- Savvy, affluent, and online
- Men and affluent the most frequent users
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- Figure 70: Next most popular attitudes towards plastic card usage, by socio-demographic group, April 2007
- The potential for building reward schemes
Card Usage – Detailed Demographics
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- Figure 71: Most popular attitudes towards cash and debit cards, by socio-demographic group, April 2007
- Figure 72: Next most popular attitudes towards cash and debit cards, by socio-demographic group, April 2007
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- Figure 73: Most popular attitudes towards plastic card usage, by socio-demographic group, April 2007
- Figure 74: Next most popular attitudes towards plastic card usage, by socio-demographic group, April 2007
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Switching, Card Selection and Targeting Opportunities
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- Key points
- Retention work paying dividends?
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- Figure 75: Card switching behaviour, 2006-07
- Younger consumers craving credit
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- Figure 76: Card switching behaviour, by gender, age, socio-economic status, and lifestage, April 2007
- Retention through product design
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- Figure 77: Card switching behaviour, by working status, household income, tenure, Internet usage and newspaper readership, April 2007
- Banking on loyalty
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- Figure 78: Card switching behaviour, by card provider, April 2007
- Satisfaction remains high
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- Figure 79: Card selection and usage, April 2007
- Shining happy people holding credit cards
- Watching out for security
- Insecure happiness
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- Figure 80: Most popular attitudes towards card selection and usage, by gender, age, socio-economic group and lifestage, 2006-07
- How to get the youngsters?
- ABs attracted to reward schemes and ethical causes
- Affluent – and switching balances
- The mortgage-backed credit card?
- The more remote the provider, the lower the satisfaction
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- Figure 81: Card selection and usage, by card provider, April 2007
- Getting and giving something back
- Targeting opportunities for credit and debt cards
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- Figure 82: Credit and debit card targeting groups, April 2007
- Credit Card Cravers – 15% of sample or 3 million adults aged 18+
- Debiteers – 19% of sample or 3.8 million adults aged 18+
- Plastic Passion – 17% of sample or 3.4 million adults aged 18+
- Cash is King – 39% of sample or 7.8 million adults aged 18+
- The affluent opt for credit cards
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- Figure 83: Credit and debit card target groups, by demographic group, April 2007
- Polarising the payment markets
- Craving rewards
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- Figure 84: Statements about credit cards, by target group, April 2007
- Contrasting attitudes among plastic card users
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- Figure 85: Attitudes towards credit cards, by cluster group, April 2007
- What’s in your wallet?
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- Figure 86: Credit card repertoire, by number of card providers used, April 2007
- Implications and opportunities
- Women key debit card users
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- Figure 87: People most likely to have particular debit card usage habits, April 2007
- Figure 88: People most likely to have particular credit card usage habits, April 2007
Switching, Card Selection and Targeting Opportunities – Detailed Demographics
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- Figure 89: Card switching behaviour, April 2007
- Figure 90: Most popular attitudes towards card selection and usage, by demographic sub-group, 2006-07
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- Figure 91: Next most popular attitudes towards card selection and usage, by demographic sub-group, 2006-07
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