ISBN 1-85765-603-2

Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Definition

MARKET SECTORS

MARKET TRENDS

Table 1: Estimated Number of Credit and Debit Cards on Issue (million), 1991-1995

Table 2: Number of Credit and Debit Cards on Issue by Type and Market Share (000 and percent), 1995

Market Size

THE TOTAL MARKET

FRAUD

CARD EXPENDITURE

TRANSACTIONS ANALYSIS

NON-CASH PAYMENTS

CASH PAYMENTS

CREDIT CARD BORROWING

CASH ADVANCES ON CREDIT CARDS

Table 3: The Total UK Market for Plastic Cards by Number of Cards on Issue (000), 1991-1995

Table 4: Estimated UK Market for Plastic Cards by Value of Turnover at Current Prices (£m), 1991-1995

Table 5: Volume and Value of Credit and Debit Card Transactions (million, £m and £), 1991-1995

Table 6: Average Credit Card Balances Outstanding (£ and percent), 1991-1995

Table 7: UK Card Issuers Plastic Card Fraud Losses (£m), 1991-1995

Table 8: UK Fraud Losses - Circumstances of Loss by Value (£m), 1995

Table 9: UK Fraud Losses by Place of Misuse (£m), 1995

Table 10: Comparative Credit and Debit Card Spending Growth by Sector (£m), July 1995 and July 1996

Table 11: Average Transaction Values for Credit and Debit Cards by Type of UK Outlet at Current Prices (£), 1994 and 1995

Table 12: Credit and Debit Card Spending by Sector ( percent), 1995

Table 13: Non-Cash Transaction Volumes in Great Britain by Number and Type (million), 1991-1995

Table 14: Credit Card Borrowing via the UK Banks (£m, 000, £ and percent ), 1991-1995

Table 15: MasterCard and Visa - Cash Advances as a percentage of Total Credit Card Turnover (£m and percent), 1991-1995

Industry Background

RECENT HISTORY

THE NEXT GENERATION OF CARDS

INDUSTRY CONCENTRATION

CREDIT CARD TYPES

DISTRIBUTION

TRADE ASSOCIATIONS

Table 16: UK Outlets Accepting Visa, Mastercard or Switch (000), 1991-1995

Table 17: UK Credit and Charge Cards in Circulation by Type of Issuer (000 and percent), 1991-1995

Table 18: Major Bank Issuers of Credit Cards in the UK by Number of Cards and Accounts and Value of Transactions (000, £m £ and percent), 1991-1995

Table 19: Major UK Banks Issuing MasterCard and Visa Credit Cards, 1995

Table 20: Examples of Charge Cards Issued by Some UK Banks (£ and percent), May 1995

Table 21: A Selection of UK Affinity Cards, 1996

Table 22: Some Examples of Facility Cards, 1996

Table 23: Store Cards of Major UK Retailers, 1996

Table 24: Growth of Debit Card Transactions in Great Britain (million), 1988-1995

Table 25: UK Membership of Switch, August 1996

Table 26: UK Switch Activity (million, £m and £), October 1988 (Start-Up)-June 1996

Table 27: Cash Dispensers and ATMs in Major UK Banks and Building Societies, 1991-1995

Table 28: Reciprocal Shared ATM Networks in Great Britain, 1995

Competitor Analysis

THE MARKETPLACE

MARKET SHARES

MARKET LEADERS AND THEIR BRANDS

ADVERTISING AND PROMOTION

Table 29: Interest Rates Charged by Top UK Card Issuers ( percent), April 1996

Table 30: Estimated Market Shares of Leading Credit Issuers in the UK Market ( percent), 1994 and 1995

Table 31: Comparative Growth in UK Debit and Credit Card Transactions by Volume and Value (million and £m), 1991-1995

Table 32: Profile of Barclays Credit Cards (000, £m and million), 1991-1995

Table 33: Financial Results of NatWest UK (£m), First Half 1995-1996

Table 34: Financial Details for Midland Bank Cards, July 1996

Table 35: Lloyds Bank and Trustee Savings Bank (Lloyds TSB Group) Card Products, 1996

Table 36: Financial Details for Lloyds and TSB Cards, July 1996

Table 37: Main Media Advertising Expenditure on Credit and Charge Cards (£000), 12 Months to March 1996

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

CARD OWNERSHIP

FREQUENCY OF CARD USE

CARD EXPENDITURE

WHY USE PLASTIC?

STORE CARDS

CREDIT CARD VERSUS OTHER BORROWING

MONDEX

Table 38: Plastic Card Ownership (singly or jointly) by Adults in Great Britain ( percent), 1993-1995

Table 39: Plastic Card Ownership by Adults in Great Britain ( percent owning), 1996

Table 40: Ownership of Credit/Charge Cards in Great Britain ( percent of adults owning), 1994 and 1995

Table 41: Frequency of Usage Credit or Charge Cards in Great Britain ( percent of adults), 1993-1995

Table 42: Average Monthly Usage by Card Type ( percent of adults), 1996

Table 43: Average Monthly Expenditure of Adults Using Payment Cards ( percent of adults), 1996

Table 44: Items Purchased in the UK Using Payment Cards ( percent), 1996

Table 45: Fuel Purchases by Payment Method in Great Britain ( percent of adults), 1994 and 1995

Table 46: Minimum Value of Plastic Card Purchases ( percent of adults), 1996

Table 47: Reasons for Choosing to Pay With Plastic ( percent of adults), 1996

Table 48: Credit Card Versus Other Forms of Borrowing - Credit Used for the Purchase of a Single Item Over £200 ( percent), 1993-1995

Outside Suppliers to the Industry

INTRODUCTION

EFTPOS SUPPLIERS

EPOS SUPPLIERS

COMMUNICATIONS

CARD FRAUD SERVICES

CREDIT SCORING

TRANSACTION PROCESSING

HOST COMPUTING SYSTEMS

THE FUTURE

Current Issues

CONSUMER SPENDING

POWERGEN PLUS CARD

DINERS CLUB

TESCO

AMERICAN EXPRESS

VISA

GLOBAL CHIP CARD SPECIFICATIONS

NATWEST/ORANGE

AFFINITY CARDS

CREDIT CARD TERMINAL UPGRADES

NATIONAL PHARMACEUTICAL ASSOCIATION

MONDEX

NEW COMPANY BRANDED CARDS

THE PEOPLE'S CARD

BRITISH TELECOM

RATE CUT

MASTERCARD

NATWEST UNIVERSITY CARD

ACCOUNT SETTLEMENT

SMART CARD STANDARDS

RETAIL CARDS

PROMOTIONAL EXPENDITURE

MBNA - ADVANTAGE

Forecasts

CURRENT OUTLOOK

FORECASTS 1996 TO THE YEAR 2000

Table 49: Forecast Card Ownership of Debit and Credit Cards (000), 1996-2000

Table 50: Forecast Turnover for Plastic Cards at Current Prices (£m), 1996-2000

Company Profiles

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

At the end of 1995 there were 74.9 million credit and finance cards on issue in the UK and the value of card transactions for the year totalled £85.83bn. Since 1991, the annual volume of transactions using bank credit cards has risen from 690 million to 888 million, an increase of 28.7 percent. Over the same period, the annual volume of domestic retail debit card transactions has tripled, from 359 million to 1 billion. In 1995, the value of an average transaction with a credit card was £48.05 and with a debit card £28.34.

The market is increasingly competitive, with a number of new entrants from overseas, some of which have declared an intention to break the stranglehold on the market held by the UK retail banks, which are seen to be imposing excessively high interest rates. There is a great deal of activity surrounding company-branded cards, with new products promised from a number of card issuers; and American Express striving to increase its penetration. Tesco has taken the lead amongst retailers and introduced a card offering banking services. Meanwhile, another battle is raging amongst the network providers as Visa, MasterCard and American Express try to increase the number of financial institutions using their products and services.

Trials of electronic purses, in the UK and at the 1996 Olympics, have resulted in the formation of Mondex International and the announcement of a competitive product from Visa, already supported by a number of banks. All this activity is intensifying discussion about the lack of suitable standards, and who is to pay for a new generation of card reading equipment which must be installed in retail outlets if the proposed chip-based enhancements are to be readable.

Over the next 5 years, Key Note forecasts the number of credit and finance cards of all types on issue in the UK will increase by a further 27.1 percent, reaching 102.3 million by the year 2000. At current prices, the total annual value of transactions will increase by 38 percent to reach £130.2bn.

Debit cards will continue to grow the fastest and by the year 2000 this type of card will represent 44.4 percent of all credit and finance cards on issue. The total annual value of credit card transactions, at current prices, is forecast to increase by 26.2 percent, reaching £78.4bn; and that for debit cards by 60.7 percent reaching £51.85bn. Within the credit card sector, store cards will enjoy the strongest growth with the total value of transactions reaching £6.42bn (up 30.9 percent) by the year 2000.

Text © 1996 Key Note

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