Financial Cards and Payments in the United Kingdom

Euromonitor International March 2011

Financial Cards and Payments

United Kingdom

List of Contents and Tables
FINANCIAL CARDS AND PAYMENTS IN THE UNITED KINGDOM - INDUSTRY OVERVIEW ............................................................................................................................................. 2
Executive Summary ................................................................................................................................................ 2 British Economy Recovers But Consumers Remain Cautious ................................................................................... 2 Debit Transactions Overtakes Cash for the First Time ............................................................................................. 2 Barclays Group Plc Leads Financial Cards and Payments in 2009 ......................................................................... 2 Mobile Commerce Will Continue Growing in the UK............................................................................................... 2 Economic Recovery Expected To Dominate the Forecast Period ............................................................................. 2 Key Trends and Developments .............................................................................................................................. 2 the Recovery of the UK Economy Remains Uncertain .............................................................................................. 2 the British Banking Landscape Changes As A Result of the Recession ..................................................................... 3 Mobile Commerce Continues Growing in the UK..................................................................................................... 4 New Regulations for Issuers of Credit Cards and Store Cards ................................................................................. 5 Contactless Cards Slowly Become More Popular in the UK .................................................................................... 6 Market Indicators ................................................................................................................................................... 7 Table 1 Number of POS Terminals 2005-2010 .............................................................................. 8 Table 2 Number of ATMs 2005-2010 ............................................................................................ 8 Table 3 Value Lost to Fraud 2005-2010 ......................................................................................... 8 Table 4 Card Expenditure by Location 2010 .................................................................................. 8 Table 5 Card Expenditure by Category 2010 ................................................................................. 8 Table 6 Financial Cards in Circulation by Type: % Number of Cards 2005-2010 ......................... 9 Table 7 Domestic versus Foreign Spend 2010 ............................................................................... 9 Market Data ............................................................................................................................................................ 9 Table 8 Consumer Payments: Value 2005-2010............................................................................. 9 Table 9 Consumer Payments: Number of Transactions 2005-2010...............................................10 Table 10 Financial Cards: Number of Cards in Circulation 2005-2010 ..........................................10 Table 11 Financial Cards Transactions: Value 2005-2010 ..............................................................10 Table 12 Financial Cards: Number of Transactions 2005-2010 ......................................................10 Table 13 Financial Cards: Number of Accounts 2005-2010............................................................11 Table 14 Financial Cards: Number of Cards by Issuer 2005-2009 ..................................................11 Table 15 Financial Cards: Number of Cards by Operator 2005-2009 .............................................12 Table 16 Financial Cards: Card Payment Transaction Value by Operator 2005-2009 ....................12 Table 17 Financial Cards: Card Payment Transaction Value by Issuer 2005-2009 .........................12 Table 18 Consumer Payments Forecast: Value 2010-2015 .............................................................13 Table 19 Consumer Payments Forecast: Number of Transactions 2010-2015 ................................13 Table 20 Financial Cards Forecast: Number of Cards in Circulation 2010-2015 ............................14 Table 21 Financial Cards Forecast: Value 2010-2015 .....................................................................14 Table 22 Financial Cards Forecast: Number of Transactions 2010-2015 ........................................14 Table 23 Financial Cards Forecast: Number of Accounts 2010-2015 .............................................15 Definitions ...............................................................................................................................................................15 Atm Function............................................................................................................................................................15 Debit Function .........................................................................................................................................................15 Credit Function ........................................................................................................................................................15 Commercial Credit Cards ........................................................................................................................................16 Charge Card Function .............................................................................................................................................16

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Commercial Charge Cards ......................................................................................................................................16 Open Loop Pre-paid Function .................................................................................................................................16 Closed Loop Pre-paid Function ...............................................................................................................................16 Store Cards ..............................................................................................................................................................16 Pre-paid ...................................................................................................................................................................16 Contact Smart Card .................................................................................................................................................18 Contactless Smart Card ...........................................................................................................................................18 Card Expenditure by Location .................................................................................................................................18 Card Expenditure by Sector .....................................................................................................................................18 Domestic Versus Foreign .........................................................................................................................................19 Value Lost To Fraud ................................................................................................................................................19 Summary 1 Research Sources ..............................................................................................................20

FINANCIAL CARDS AND PAYMENTS IN THE UNITED KINGDOM - COMPANY PROFILES ........21
Lloyds Tsb Group Plc - Consumer Finance - United Kingdom .........................................................................21 Strategic Direction ...................................................................................................................................................21 Key Facts .................................................................................................................................................................21 Summary 2 Lloyds TSB Group Plc: Key Facts ...................................................................................21 Summary 3 Lloyds TSB Group Plc: Operational Indicators ................................................................21 Company Background ..............................................................................................................................................21 Competitive Positioning ...........................................................................................................................................22 Summary 4 Lloyds TSB Group Plc: Competitive Position 2009 .........................................................22 National Grid Plc - Consumer Finance - United Kingdom .................................................................................23 Strategic Direction ...................................................................................................................................................23 Key Facts .................................................................................................................................................................23 Summary 5 National Grid Plc: Key Facts ............................................................................................23 Summary 6 National Grid Plc: Operational Indicators ........................................................................23 Company Background ..............................................................................................................................................23 Competitive Positioning ...........................................................................................................................................24 Summary 7 National Grid Plc: Competitive Position 2009 .................................................................24 Newcastle Building Society - Consumer Finance - United Kingdom .................................................................25 Strategic Direction ...................................................................................................................................................25 Key Facts .................................................................................................................................................................25 Summary 8 Newcastle Building Society: Key Facts............................................................................25 Summary 9 Newcastle Building Society: Operational Indicators ........................................................25 Company Background ..............................................................................................................................................25 Competitive Positioning ...........................................................................................................................................26 Summary 10 Newcastle Building Society: Competitive Position 2009 .................................................26 Santander UK Plc - Consumer Finance - United Kingdom ................................................................................27 Strategic Direction ...................................................................................................................................................27 Key Facts .................................................................................................................................................................27 Summary 11 Santander UK Plc: Key Facts ...........................................................................................27 Summary 12 Santander UK Plc: Operational Indicators ........................................................................27 Company Background ..............................................................................................................................................27 Competitive Positioning ...........................................................................................................................................28 Summary 13 Santander UK Plc: Competitive Position 2009 .................................................................28 Transport for London - Consumer Finance - United Kingdom .........................................................................28 Strategic Direction ...................................................................................................................................................28 Key Facts .................................................................................................................................................................29

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Summary 14 Transport for London: Key Facts .....................................................................................29 Company Background ..............................................................................................................................................29 Competitive Positioning ...........................................................................................................................................29 Summary 15 Transport for London: Competitive Position 2009 ...........................................................30

ATM CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS ................................................31
Headlines ................................................................................................................................................................31 Trends .....................................................................................................................................................................31 Competitive Landscape .........................................................................................................................................32 Prospects .................................................................................................................................................................32 Category Data ........................................................................................................................................................33 Table 24 ATM Cards Category Performance: 2005-2010 ...............................................................33 Table 25 ATM Cards Category Performance: Number of Cards in Circulation 20052010 ..................................................................................................................................33 Table 26 ATM Cards Category Performance: % Growth 2005-2010..............................................33 Table 27 ATM Cards in Circulation Category Performance: % Growth 2005-2010 .......................33 Table 28 ATM Cards Forecast Category Performance: 2010-2015.................................................33 Table 29 ATM Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015.........................................................................................................................34 Table 30 ATM Cards Forecast Category Performance: % Growth 2010-2015 ...............................34 Table 31 ATM Cards in Circulation Forecast Category Performance: % Growth 20102015 ..................................................................................................................................34

CHARGE CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS ........................................35
Headlines ................................................................................................................................................................35 Trends .....................................................................................................................................................................35 Competitive Landscape .........................................................................................................................................35 Category Data ........................................................................................................................................................36 Table 32 Charge Cards Category Performance: 2005-2010 ............................................................36 Table 33 Charge Cards Category Performance: Number of Cards in Circulation 20052010 ..................................................................................................................................37 Table 34 Charge Cards Category Performance: % Growth 2005-2010 ...........................................37 Table 35 Charge Cards in Circulation Category Performance: % Growth 2005-2010 ....................37 Table 36 Personal Charge Cards Category Performance: 2005-2010 ..............................................37 Table 37 Personal Charge Cards Category Performance: Number of Cards in Circulation 2005-2010 ......................................................................................................37 Table 38 Personal Charge Cards Category Performance: % Growth 2005-2010 ............................37 Table 39 Personal Charge Cards in Circulation Category Performance: % Growth 2005-2010.........................................................................................................................38 Table 40 Commercial Charge Cards Category Performance: 2005-2010 ........................................38 Table 41 Commercial Charge Cards Category Performance: Number of Cards in Circulation 2005-2010 ......................................................................................................38 Table 42 Commercial Charge Cards Category Performance: % Growth 2005-2010 ......................38 Table 43 Commercial Charge Cards in Circulation Category Performance: % Growth 2005-2010.........................................................................................................................38 Table 44 Charge Cards: Number of Cards by Issuer 2005-2009 .....................................................39 Table 45 Charge Cards: Number of Cards by Operator 2005-2009.................................................39 Table 46 Charge Cards Payment Transaction Value by Issuer 2005-2009 ......................................39

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....43 Commercial Charge Cards Forecast Category Performance: 2010-2015 ....................................................................45 Headlines ......40 Commercial Charge Cards: Number of Cards by Operator 2005-2009 ........................47 Table 69 Credit Cards Category Performance: Number of Cards in Circulation 20052010 .....................................................42 Charge Cards in Circulation Forecast Category Performance: % Growth 2010-2015.....................................43 Commercial Charge Cards in Circulation Forecast Category Performance: % Growth 2010-2015......................................................................................47 Table 71 Credit Cards in Circulation Category Performance: % Growth 2005-2010 ........................................................................................48 Table 73 Personal Credit Cards Category Performance: Number of Cards in Circulation 2005-2010 ....................................................................................................................................45 Competitive Landscape ............................................42 Charge Cards Forecast Category Performance: % Growth 2010-2015................40 Personal Charge Cards: Number of Cards by Operator 2005-2009 ...........................................................................................................................................................................48 Table 74 Personal Credit Cards Category Performance: % Growth 2005-2010 ..............41 Commercial Charge Cards Payment Transaction Value by Operator 20052009 ........................................................................................Financial Cards and Payments United Kingdom Table 47 Table 48 Table 49 Table 50 Table 51 Table 52 Table 53 Table 54 Table 55 Table 56 Table 57 Table 58 Table 59 Table 60 Table 61 Table 62 Table 63 Table 64 Table 65 Table 66 Table 67 Charge Cards Payment Transaction Value by Operator 2005-2009 ........................................................................................................................................................43 Commercial Charge Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015.....................................................43 Commercial Charge Cards Forecast Category Performance: % Growth 20102015 ............46 Prospects .....................................................................40 Commercial Charge Cards: Number of Cards by Issuer 2005-2009 ........................................................40 Personal Charge Cards Transaction Value by Operator 2005-2009 ............................................................................................................................................................................................................................................................CATEGORY ANALYSIS ........................................................................................................................................................................................40 Personal Charge Cards Transaction Value by Issuer 2005-2009 ........................................................47 Table 72 Personal Credit Cards Category Performance: 2005-2010 ......45 Trends ......41 Charge Cards Forecast Category Performance: 2010-2015 .....................................................................................................................................................................46 Category Data ..................42 Personal Charge Cards Forecast Category Performance: % Growth 20102015 .........................................39 Personal Charge Cards: Number of Cards by Issuer 2005-2009.................................................43 Personal Charge Cards in Circulation Forecast Category Performance: % Growth 2010-2015............................................................................47 Table 68 Credit Cards Category Performance: 2005-2010 ....................................................................................42 Charge Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 ......................................................................................................44 CREDIT CARDS IN THE UNITED KINGDOM ..............48 Table 77 Commercial Credit Cards Category Performance: Number of Cards in Circulation 2005-2010 .............................................................47 Table 70 Credit Cards Category Performance: % Growth 2005-2010...........................................................................................................................................................................................................................................................................48 Table 75 Personal Credit Cards in Circulation Category Performance: % Growth 2005-2010............................................................................................42 Personal Charge Cards Forecast Category Performance: 2010-2015 .....................................................................................................................48  Euromonitor International Page iv ....................................48 Table 76 Commercial Credit Cards Category Performance: 2005-2010 .....................................................................42 Personal Charge Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 ................................41 Commercial Charge Cards Payment Transaction Value by Issuer 2005-2009 ..........................

............................................................................................................55 DEBIT CARDS IN THE UNITED KINGDOM .......................................................................................57 Prospects .................................................................57 Category Data .....................51 Personal Credit Cards Payment Transaction Value by Operator 2005-2009 .........54 Personal Credit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 ...........53 Credit Cards Forecast Category Performance: 2010-2015 .....................................................................................50 Personal Credit Cards: Number of Cards by Issuer 2005-2009 ......59 Table 110 Debit Cards Payment Transaction Value by Issuer 2005-2009 ........................................................55 Commercial Credit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 .....52 Commercial Credit Cards: Number of Cards by Operator 2005-2009.....................56 Trends ....................49 Commercial Credit Cards in Circulation Category Performance: % Growth 2005-2010.......................52 Commercial Credit Cards: Number of Cards by Issuer 2005-2009 ............................................................................................................................58 Table 106 Debit Cards Category Performance: % Growth 2005-2010........................................50 Personal Credit Cards: Number of Cards by Operator 2005-2009 .............................................................................................56 Competitive Landscape ........................................................................CATEGORY ANALYSIS .............................52 Commercial Credit Cards Payment Transaction Value by Issuer 2005-2009 ........................49 Credit Cards: Number of Cards by Issuer 2005-2009 .......................................................................59 Table 111 Debit Cards Payment Transaction Value by Operator 2005-2009 ..........54 Credit Cards in Circulation Forecast Category Performance: % Growth 20102015 ................................................................54 Personal Credit Cards in Circulation Forecast Category Performance: % Growth 2010-2015.................................................53 Credit Cards Forecast Category Performance: % Growth 2010-2015 ..................................................................................................................................................................................................59 Table 109 Debit Cards: Number of Cards by Operator 2005-2009 .................................................................................................Financial Cards and Payments United Kingdom Table 78 Table 79 Table 80 Table 81 Table 82 Table 83 Table 84 Table 85 Table 86 Table 87 Table 88 Table 89 Table 90 Table 91 Table 92 Table 93 Table 94 Table 95 Table 96 Table 97 Table 98 Table 99 Table 100 Table 101 Table 102 Table 103 Commercial Credit Cards Category Performance: % Growth 2005-2010 .......................................................................................58 Table 105 Debit Cards Category Performance: Number of Cards in Circulation 20052010 ......................................................55 Commercial Credit Cards in Circulation Forecast Category Performance: % Growth 2010-2015...................54 Personal Credit Cards Forecast Category Performance: 2010-2015 ..........................55 Commercial Credit Cards Forecast Category Performance: % Growth 20102015 ................................................58 Table 107 Debit Cards in Circulation Category Performance: % Growth 2005-2010 .....................................................................................................................................................53 Credit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 ...............................55 Commercial Credit Cards Forecast Category Performance: 2010-2015 ..................................49 Credit Cards Payment Transaction Value by Issuer 2005-2009 ................................49 Credit Cards: Number of Cards by Operator 2005-2009 ......................................................................................................................54 Personal Credit Cards Forecast Category Performance: % Growth 2010-2015..........................................................................60  Euromonitor International Page v .58 Table 104 Debit Cards Category Performance: 2005-2010 .............................................................................53 Commercial Credit Cards Payment Transaction Value by Operator 20052009 .............................50 Credit Cards Payment Transaction Value by Operator 2005-2009 ........................................................................................................................................................................................................................................................................................................................................59 Table 108 Debit Cards: Number of Cards by Issuer 2005-2009 .................................................................................................................................................................................................................................................................................56 Headlines ......................................51 Personal Credit Cards Payment Transaction Value by Issuer 2005-2009 .....................................................

..........67 Table 129 Open Loop Pre-paid Cards: Number of Cards by Operator 2005-2009 .....72  Euromonitor International Page vi ......................................................................60 Debit Cards Forecast Category Performance: % Growth 2010-2015 .........................................................70 Table 140 Pre-paid Cards Forecast Category Performance: % Growth 2010-2015....................................................66 Table 125 Pre-paid Cards: Number of Cards by Operator 2005-2009...............................................................................................................................................................................................................................................69 Table 138 Closed Loop Pre-paid Cards Forecast Category Performance: 2010-2015 .....................................69 Table 136 Pre-paid Cards Forecast Category Performance: 2010-2015 ......................................................................................................................65 Table 117 Open Loop Pre-paid Cards Category Performance: 2005-2010 ........................................................................................62 Headlines ...................................................................................................................63 Prospects .............................66 Table 122 Closed Loop Pre-paid Cards Category Performance: % Growth 2005-2010 ..........................................................66 Table 126 Pre-paid Cards Transaction Value by Issuer 2005-2009 ...69 Table 137 Open Loop Pre-paid Cards Forecast Category Performance: 2010-2015 ......................................................................................64 Category Data .....................................................60 Debit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015....................................................................................................72 Trends .......................................................................................................68 Table 134 Closed Loop Pre-paid Cards Transaction Value by Issuer 2005-2009 ...........................................................................................................................65 Table 118 Closed Loop Pre-paid Cards Category Performance: 2005-2010 .........................................................................................................Financial Cards and Payments United Kingdom Table 112 Table 113 Table 114 Table 115 Debit Cards Forecast Category Performance: 2010-2015................70 Table 142 Closed Loop Pre-paid Cards Forecast Category Performance: % Growth 2010-2015......67 Table 128 Open Loop Pre-paid Cards: Number of Cards by Issuer 2005-2009 ..........65 Table 119 Pre-paid Cards Category Performance: Number of Cards in Circulation 2005-2010...........69 Table 139 Pre-paid Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 ..............68 Table 131 Open Loop Pre-paid Cards Transaction Value by Operator 2005-2009 ................................................................................70 Table 141 Open Loop Pre-paid Cards Forecast Category Performance: % Growth 20102015 .....................................................60 Debit Cards in Circulation Forecast Category Performance: % Growth 20102015 .....................................................................62 Trends .........................................................................................................68 Table 132 Closed Loop Pre-paid Cards: Number of Cards by Issuer 2005-2009 .................67 Table 130 Open Loop Pre-paid Cards Transaction Value by Issuer 2005-2009 ...CATEGORY ANALYSIS ........................................65 Table 120 Pre-paid Cards Category Performance: % Growth 2005-2010 ..........................................66 Table 124 Pre-paid Cards: Number of Cards by Issuer 2005-2009 ..........70 Table 143 Pre-paid Cards in Circulation Forecast Category Performance: % Growth 2010-2015...............................................65 Table 116 Pre-paid Cards Category Performance: 2005-2010 ........................................................................................................................................65 Table 121 Open Loop Pre-paid Cards Category Performance: % Growth 2005-2010 ..............................................62 Competitive Landscape ..........................................................69 Table 135 Closed Loop Pre-paid Cards Transaction Value by Operator 2005-2009 ...............................................................................70 STORE CARDS IN THE UNITED KINGDOM ............................................................................................................................................................................................................................................CATEGORY ANALYSIS ..................................................................68 Table 133 Closed Loop Pre-paid Cards: Number of Cards by Operator 2005-2009 .............................................................................................................60 PRE-PAID CARDS IN THE UNITED KINGDOM .................................72 Headlines ...................................67 Table 127 Pre-paid Cards Transaction Value by Operator 2005-2009 .................................................................................................

..............................74 Table 146 Store Cards Category Performance: % Growth 2005-2010 .........75 Table 152 Store Cards Forecast Category Performance: % Growth 2010-2015 ........................Financial Cards and Payments United Kingdom Competitive Landscape ..............................................................................................................................................................................................................74 Table 150 Store Cards Forecast Category Performance: 2010-2015 .......................................72 Prospects ........................................................................74 Table 148 Store Cards: Number of Cards by Issuer 2005-2009 ....................................................73 Category Data .................................................................75 Table 151 Store Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015....................................................................................................................................................................................................................................74 Table 147 Store Cards in Circulation Category Performance: % Growth 2005-2010 ........75 Table 153 Store Cards in Circulation Forecast Category Performance: % Growth 20102015 .................................................................75  Euromonitor International Page vii ..........................................................................................................................................................................74 Table 149 Store Cards: Payment Transaction Value by Issuer 2005-2009 ...........73 Table 145 Store Cards Category Performance: Number of Cards in Circulation 20052010 .......................................................................................................................73 Table 144 Store Cards Category Performance: 2005-2010 ...........................................

Financial Cards and Payments United Kingdom  Euromonitor International Page 1 .

Debit Transactions Overtakes Cash for the First Time 2010 was the first year during which debit payments overtook cash as a method of payment in the UK. As British consumers were still looking for financial restructuring. albeit at a much slower pace than during the years preceding the onset of the recession. The result was a change in the political landscape with the Labour party leaving government after 12 years in power. Banks and other lending institutions have been asked by the government to start lending again to consumers. Barclays Group Plc Leads Financial Cards and Payments in 2009 Barclays Group Plc led financial cards and payments in the UK during 2009 thanks to its dominant position in credit cards and strength in debit cards. The other main players in financial cards in 2009 were also all leading banks.  Euromonitor International Page 2 . Lloyds TSB Group Plc and HSBC Bank Plc. With an increasing number of retailers offering websites specifically design to be browsed by mobile devices. As British consumers abandoned their credit cards during the recession. Economic Recovery Expected To Dominate the Forecast Period Governmental efforts to help lending institutions out of trouble are expected to have a positive impact on consumer lending in the UK over the forecast period. Amidst this scenario. Britons continued with their austere spending habits which they developed during the economic recession. At the same time. the UK went to the polls to elect a new parliament in May 2010. At the same time. the use of debit cards for micropayments helped to increase the number of debit transactions as many consumers find debit transactions more convenient than paying with cash. online purchases through web-enabled mobile phones are expected to develop from the focus on ringtones which marked the review period to more expensive items during the forecast period. The new coalition government formed by the Conservative and Liberal Democrats faced the task of bringing the UK back on track for economic recovery. British consumers will become more comfortable using these websites. although a more cautious approach will be likely to avoid lending to high-risk individuals. they continue to think twice about the purchase of non-essential items. Many consumers continued to face redundancy and unemployment and lower levels of discretionary income whilst still having the burden of debts to repay. Mobile Commerce Will Continue Growing in the UK As the penetration of smart phones in the UK keeps growing. the use of debit experienced a rapid increase. namely Royal Bank of Scotland Group.Financial Cards and Payments United Kingdom FINANCIAL CARDS AND PAYMENTS IN THE UNITED KINGDOM . growth in financial cards and payments was positive. Leading British banks continued to benefit from their strong profiles and large customer bases. KEY TRENDS AND DEVELOPMENTS the Recovery of the UK Economy Remains Uncertain After 2009 saw the UK going through its worst recession since World War II.INDUSTRY OVERVIEW EXECUTIVE SUMMARY British Economy Recovers But Consumers Remain Cautious Although the British economy showed a recovery over the first part of 2010. The high popularity enjoyed by web enabled mobile phones such as the Apple’s iPhone and the new generation of smartphones with android technology are helping to the intensify the expansion of these devices. mobile commerce is also expected to increase significantly over the forecast period.

0% since January 2011. standing at 53 points. the lowest figure in the last ten years. reaching £35.5% to 20. where and how they spend their money over the forecast period. debit cards will benefit from the ongoing uncertainty in the economic situation over the forecast period. Store cards will continue performing poorly over the forecast period as the trend for retailers to shift from store cards to co-branded credit cards will continue. which was due mainly their high interest rates and limitations in terms of being useful in only one outlet. The new VAT rate. according to official statistics. On the other hand. Euromonitor International expects GDP growth in the UK during 2010 to have been 1. especially now that the VAT rate has been set at a higher rate of 20. As British consumers preferred to maintain full control over the amount of money they were spending and avoid the higher fees and interest rates on offer from credit cards. acquisitions. The popularity of the Oyster card as a payment method for the London transportation network also boosted the positive performance of closed loop cards in 2010 as transactions value increased by 15%. VAT was increased from 17. the British Banking Landscape Changes As A Result of the Recession The global financial crisis brought about significant changes in the competitive landscape in the UK banking system. Outlook The British economy is expected to see a slow recovery with a ‘double dip recession’ remaining a possibility in 2011. government bail-outs. If the landscape was dominated by traditional banks and financial brokers before the advent of the financial crisis. Overall Consumer Finance Transactions value increased by less than 2%. together with increasing inflation and unemployment. well below its long-run average of 81. Store cards were the other main casualty in 2010. Within this scenario. The fact that funds are debited directly from the card user’ account instantaneously will play a key role in the positive growth of debit cards over the forecast period as this will allow consumers to feel more fully in control of their finances. credit cards reported only a 2% increased in transaction value in 2010.7 billion. After the fall in value experienced in 2009. Debit cards is set to increase in constant value at a CAGR of 7% over the forecast period. Store cards reported a 17% fall in transactions value.7%. pre-paid cards recorded positive growth in 2010 as closed loop gift cards are becoming increasingly popular among British consumers.0% in January 2011. Store cards is set to fall in constant value at a CAGR of -13% over the forecast period. unemployment continued to be an issue in 2010 as the unemployment rate remained at 7. debit cards transactions value increased by 10%. by 2010 the situation had changed significantly due to a flurry of mergers. On the other hand. The main beneficiary of this new and more austere financial cards environment was debit cards. As Britons attempted to maintain control over their finances.9% of the active population at the end of the year. Future Impact The trend towards a high degree of caution in consumer spending will remain a key feature of the British economy over the forecast period.  Euromonitor International Page 3 .Financial Cards and Payments United Kingdom The main target of the coalition government was to tackle the financial deficit by implementing spending cuts and tax rises. Britons will continue paying extra attention to the way in which they spend their money. At the same time. credit cards was the most affected financial cards category. consumer confidence reached a historic low in December 2010 according to the Nationwide Consumer Confidence Index. This negative performance was accentuated by the fact that and increasing number of British retailers are abandoning store cards in favour of co-branded credit cards. according to Euromonitor International research. nationalisations and new entries. are likely to put extra pressure on British consumers and they will react by being more cautious about when. Current Impact UK consumers remained very cautious in 2010 with regards to the money they were spending.

However. At Global Brand Owner level. Although Metro Bank started its operations initially only with four branches. like Tesco. but are now moving towards other kinds  Euromonitor International Page 4 . especially after its acquisition of Church House Trust. Northern Rock’s buyer will inherit the bank’s not inconsiderable share of financial cards and payments. it will be difficult for these new players to achieve the considerable size of any of the current major players.Financial Cards and Payments United Kingdom Current Impact The acquisition of Halifax Bank of Scotland Group (HBOS Group) by Lloyds Banking Group Plc helped Lloyds become the leading financial cards issuer in the UK by value. Future Impact The government is planning to sell the nationalised Northern Rock at some point in 2011. the sale of Egg Banking was not finalised as 2010 drew to a close as Barclays was reportedly willing to pay only half of what Citigroup paid when acquiring Egg Banking in 2007. the bank has since positioned itself as an alternative to traditional retail banks by offering new services such as opening seven days a week with earlier and late openings what the bank refers to as its ‘stores’ rather than branches. all of them within the London area. Mobile Commerce Continues Growing in the UK The concept of mobile commerce—or m-commerce—is still quite new in the UK. Citigroup Inc put its asset Egg Banking plc up for sale in 2010. Santander integrated Alliance and Leicester into its British division and in 2009 it was the acquisition of GE Capital Bank Ltd and its store cards division which helped the Spain-based bank to increase its presence in the highly competitive financial services sector in the UK. Outlook As the British economy remained weak at the end of 2010. The sale was part of the USbased bank’s restructuring in the wake of the financial crisis and formed a key part of its plan to sell off its unwanted assets. The performances of non-traditional players such as retailers Tesco and John Lewis are likely to improve over the forecast period as British consumers have become increasingly reluctant to deal with high street banks. Virgin Money. Britons are not only downloading ringtones and games. On the other hand. Santander’s share of financial cards in circulation increased to 4% in 2009 while the bank’s value share of total transactions increased to 6%. it is becoming more popular as the number of 3G-enabled smart phones continues rising in the country. although one route remaining open for these wishing to achieve a certain degree of size would be through a takeover of one of the existing main players. several new players decided to enter the financial services in the UK during 2010. something which many British people are likely to find very appealing following the collapse of the traditional banking model in the UK. British consumers are moving towards smartphones in their droves and are becoming increasingly comfortable with all of the advanced features offered by smartphones. 56% of all mobile phones sold in the UK in 2009 were already 3G enabled. Among the possible candidates for the acquisition of the world’s largest internet bank was Barclays Group Plc. a small regional bank. Nevertheless. In a move towards consolidation. consolidation among smaller players is likely to continue over the forecast period. Banco Santander SA also saw its share of the number of financial cards in circulation and transactions value increase during the second half of the review period. In 2008. Nevertheless. Lloyds Banking Group Plc’s share of financial cards in circulation increased to more than 9% in 2009 while the bank’s share of transactions value increased to 23%. Virgin Money is also likely to see an improvement in its performance over the forecast period. The entrance of new players into financial cards and payments is also likely over the forecast period. Metro Bank became the first new high street bank in the UK in over 100 years. will also benefit from being a highly recognisable brand among UK consumers and from its putatively ‘alternative’ ways of conducting business. a high number of small local building societies are expected to join forces in order to be able to compete in the new tougher financial environment that appeared in the UK after the economic crisis. At the same time.

One of the main reasons for the reluctance of British consumers to make payments using their mobile phones is that the majority of mobile phones do not yet have the necessary technology to allow payments to be made. the Consumer Credit Directive. In the lead up to the general election which was held in the UK during May 2010. particularly 3G and now 4G phones. adopted by the European Council in 2008. As mobile payments and other alternative payment methods grow. the use of mobile phones as payment devices presents a challenge as financial cards and cash and cheque payment have a much longer history and tradition in the UK and neither of these were subject to any major changes cash during the review period in the UK. However. On top of this. This is popular amongst the unbanked and underbanked population.Financial Cards and Payments United Kingdom of applications which are compatible with smartphones. the Department for Business. reserving hotel rooms and purchasing concert tickets directly using their mobile phones. Future Impact Mobile commerce is expected to grow very rapidly in the UK over the forecast period. will also come into  Euromonitor International Page 5 . The proliferation of smartphones with 3G capability was rapid over the second half of the review period. despite their internet connectivity. These mobile sites offer better usability when accessing through a mobile device and allow for easier viewing and payment. British consumers are expected to become more comfortable using their mobile phones as a form of payment and Apple’s iPhone 5 is expected to incorporate the necessary technology to make this possible. designing new measures to bring “a new. Though paying via mobile phone bill is popular in many Asian countries. What has proved to be more successful is paying for goods and services by entering mobile phone numbers and then having the amount charged added to the customer’s monthly mobile phone bill. British consumers now feel comfortable purchasing items with their mobile phones. British consumers are likely remain hesitant to use their mobile phones for online payment. Mobile phone manufacturers will gradually introduce devices with the necessary technology to allow payments to be made. especially following the launch of Apple’s iPhone. which often happens when new technologies are introduced. Many British retailers such as Marks & Spencer and Tesco are already offering versions of their websites especially designed to be accessed from mobile phones. Britons are likely to become more concerned about security issues. In the UK. Britons are purchasing and downloading a plethora of applications and ringtones on their smartphones. although encouraging British consumers to make payments through their mobile phones is proving more challenging. On top of this. exceeding £1 billion in 2009. Current Impact Mobile commerce is growing significantly in the UK. This will remain a threat to traditional consumer payments in the future. Furthermore. There are an array of applications or ‘apps’ on offer which confer benefits on consumers such as the possibility of booking airline tickets and checking in online. Outlook The number of 3-G mobile phones in the UK is likely to increase substantially over the forecast period. the number of companies which support the purchase of goods through mobile phones is expanding. the Office of Fair Trading also published its Irresponsible Lending Guidance. is increasing in the UK. mainstream usage is still quite slow in Europe and North America. Innovation and Skills published the government’s response to a consultation paper published on the regulation of credit and store cards in March 2010. in absence of the proper awareness and education programmes coming from card issuers. the actual payment for products and services through mobile phone remains less common. more responsible culture of credit card lending and borrowing” to the UK. The penetration of mobile phones. it will be at the expense of traditional payment methods such as cash and credit and debit cards. although cheques have been declining at a rapid rate and will be entirely phased out over the forecast period. mobile phone operators and handset manufacturers. Nevertheless. New Regulations for Issuers of Credit Cards and Store Cards The British Government was very active during the first half of 2010. At the end of March 2010. Nevertheless. this mainly applies to teenagers and migrant workers.

especially on buses and the London Underground. the Government intends to “restore consumers’ and taxpayers’ trust in financial services”. one of the most remarkable characteristics of the British banking systems. Tighter lending criteria applied to those applying for credit cards are likely to come into place as it happened in the US after the introduction of the Credit Card Accountability Responsibility and Disclosure Act (CARD) in May 2009. From January 2011. This is likely to mean that many British cardholders will cancel their cards if the issuing banks decide to increase interest rates on store cards and credit cards. On the other hand. By 2009. one negative aspect of the imposition of these new guidelines and regulations is that free banking. new repayment options will be introduced. British consumers are expected to make full use of their new rights and become more active in maximising the scope of the new regulations. control. As such. and compare credit agreements as well as the right to information. Contactless Cards Slowly Become More Popular in the UK Contactless cards are based on the concept of near field communication (NFC). Cardholders will be allowed to pay off their debts faster if they want or need to. Cardholders will also have more control over their credit limits and will now be able to tell card issuing companies not to increase limits automatically. However. Currently. The guidelines also make it compulsory for card issuing companies to run credit checks on customers to whom they seek to offer higher credit limits. British consumers will not have to wait for legislation to be passed to benefit from them. As the card companies agreed voluntarily to follow these new guidelines. although this will still need to at least meet minimum repayment requirements. The timeframe within which consumers are able to reject changes in their cards’ interest rates has been increased from 30 to 60 days. British banks have been accused of using legal jargon to mislead consumers regarding the high interest rates which are levied on those cardholders who choose not to repay their credit card bills in full or those who make late repayments. Outlook British public opinion is expected to be welcoming to these new rights as many see banks as being responsible for the financial crisis the UK has been going through since late 2008. all of new measures are expected to be welcome by British financial cardholders. reject. Current Impact From January 2011. British credit and store card holders will have five new rights. card holders are offered only two possibilities when setting up automatic repayments: the minimum possible amount or the whole outstanding balance. Banks are also expected to charge higher APRs in order to compensate for the subsequent loss of income. almost seven million Oyster  Euromonitor International Page 6 . is likely to come to an end.Financial Cards and Payments United Kingdom force in early 2011. a wireless technology which can be used within four metres of the relevant terminal. legislation is likely to be passed if the new Government feels the companies are not fully implementing the measures. Store card and credit card companies are expected to start charging annual fees per card in order to increase their revenues from British consumers. They are likely to cut credit lines to consumers and not only to those who represent a risk for the bank but also to those who do not use their cards sufficiently for the bank to make a profit. The first contactless cards were introduced into the UK in 2003 when Transport for London’s Oyster card was launched. Credit card companies will have also a duty to offer clear advice on the consequences of cardholders meeting only minimal repayment schedules. Although financial card companies have agreed voluntarily to follow the new guidelines. consumers will be able to set up automatic payments to regularly pay a fixed amount. These measures are designed to “protect consumers against practices they feel to be unfair and misleading”. Last but not least. British banks are also likely to become more selective when approving potential borrowers. although they will in reality be less favourable for the banks and lenders. The Oyster is used across the London transportation network. With these three measures. These have been summarised as the right to repay. Future Impact These new lending conditions will be more positive for consumers.

Barclaycard set up a partnership with mobile phone provider Orange and MasterCard as operator and launched the Orange Credit Card. The number of contactless cards in circulation in the UK in 2010 was 18 million. which is rumoured to be launched during summer 2011. This sticker will feature its new Zip application and can be attached to mobile phones or other devices. enables consumers to make payments as they would with any tap and go card. As both consumers and merchants are looking for quicker ways to process micropayments. the largest grocery retailer in the UK. Prêt A Manger and Eat. especially in London. substantially increasing the number of contactless transactions in the UK. If successful. Some manufacturers of mobile phone handsets will include contactless payment in new devices which are set to be launched over the forecast period. allowing a quicker transaction for the consumer and the merchant. Barclays was the first mainstream bank to launch a contactless debit card in the UK. This was the result of a 30% increase from 2009. Current Impact British consumers. Future Impact Lloyds Banking Group is planning to launch contactless cards under its LTSB brand in 2011. is expected to have contactless payment technology in-built. where customers tend to spend only minimal amounts of money per transaction. especially those travelling around London on public transport are becoming increasingly aware of the way in which NFC cards work thanks to the ubiquity of the Oyster card which is used to gain access to the capital’s public transportation network. Contactless cards only need to be tapped in proximity to the card reader. MARKET INDICATORS  Euromonitor International Page 7 . Outlook Other forms of contactless payments which are not directly related to financial cards are likely to be introduced in the UK over the forecast period. is expected to introduce in the UK its new contactless sticker at one point during the forecast period. the global brand owner of Diners Club charge cards. where Zip payments will be accepted. In late 2007. suggesting that a significant proportion of British consumers were familiar with this new technology.000 contactless debit cards under the Halifax and Bank of Scotland brands. Regarding retailers accepting contactless payments. These banks are likely to issue contactless cards for their customers over the forecast period. Discover Financial Services Inc. Tesco. is launching a contactless payment pilot scheme at some of its outlets. The same path is expected to be followed by players such as Nationwide Building Society. contactless cards are becoming increasingly accepted an increasing number of merchants. These have embedded chips which allow them to be attached to a wide range of devices from mobile phones to identity cards. The Zip application. The new iPhone 5. Other mobile phones manufacturers will likely follow Apple’s lead and also include contactless payment technology in their new handsets over the forecast period. Contactless payment is accepted mainly by fast food outlets such as Yo Sushi. Co-operative Bank and HSBC. Traditional cards with a magnetic strip have to be swiped and contactless cards with chip and pin technology still need to be inserted into a reader. the Barclaycard One Pulse. This new card also includes contactless payment technology that allows contactless payments for amounts up to £15. Contactless payment stickers could also become popular in the UK over the forecast period. which was made possible by mainstream banks issuing contactless cards to their customers en masse. it could be expanded cross country. Lloyds Banking Group has also issued around 650.Financial Cards and Payments United Kingdom cards were in circulation in London.

095.0 2009 1. trade interviews.4 409.8 725. trade associations.8 2008 1.3 Euromonitor International from official statistics.0 9.3 Leisure and recreation Operation of personal transport Transport Charge Card Transactions 4.8 100.2 40.7 2010 1. trade interviews.5 2007 63.0 Euromonitor International from official statistics. beverages.7 13.4 78.3 2008 169.0 100.2 8.0 183. tobacco Household goods and services 10. trade sources Table 5 % value analysis Card Expenditure by Category 2010 Clothing and footwear Food.2 2007 1. trade press.2 290.1 328.4  Euromonitor International Page 8 .1 Total 80.6 974.6 15. trade press.Financial Cards and Payments United Kingdom Table 1 '000 Units Number of POS Terminals 2005-2010 2005 No of POS terminals Source: 2006 1. trade press.154. trade press.5 2008 63. trade associations.5 439.9 75.1 24.3 90.3 15.0 100.0 100.7 369.1 58.2 34.7 54.3 56. company research. trade associations. company research.8 89.9 427. trade sources Table 3 £ million Value Lost to Fraud 2005-2010 2005 Counterfeit Cards Card Stolen or Lost Card not Present Card Lost or Stolen in the Post ID Fraud Others Value Lost to Fraud Source: 2006 98.6 68.5 53. trade sources Table 4 % value analysis Card Expenditure by Location 2010 Card holder present Charge Card Transactions Credit Card Transactions Debit Transactions Open Loop Pre-Paid Card Transactions Source: Card holder not present 19.0 96.6 9.050.0 Euromonitor International from official statistics. trade interviews.9 17.5 610. trade associations.2 2010 63.1 2010 196.9 2009 62.5 212.3 47.5 10. trade sources Table 2 '000 Units Number of ATMs 2005-2010 2005 No of ATMs Source: 2006 60.8 50.4 31.8 59. company research.6 21.0 2009 183.4 9.4 10.128. company research.0 2007 144.5 Euromonitor International from official statistics.1 535. trade interviews.3 667.023.6 51.0 30.

0 100.6 2008 377.Cash Transactions .9 90.0 2007 78.1 10.8 2. trade interviews.3 261.5 100.0 100.3 21.0 2008 80.1 41.0 100.0 2007 351.4 779.0 57.Charge Card Transactions .6 Total 100.1 5. trade associations.5 322.7 95. trade press.0 100.0 27.9 8. trade press.4 784.5 264.5 755.2 12.9 793.9 8.2 Consumer Payments: Value 2005-2010 74.9 2009 387.1 9.7 100.3 2.0 100.9 4. trade sources Table 7 % value analysis Domestic versus Foreign Spend 2010 Domestic . trade sources Table 6 Financial Cards in Circulation by Type: % Number of Cards 2005-2010 % number of cards 2005 Contact Smart Cards Contactless Smart Cards Other Cards Total Source: 2006 72.9 6.2 35. trade associations.1 5.3 80.0 2010 83.0  Euromonitor International Page 9 .5 265.6 317. trade interviews.0 86.Debit Transactions -.Financial Cards and Payments United Kingdom Credit Card Transactions Debit Transactions Open Loop Pre-Paid Card Transactions 4.6 1.3 692.6 18.4 2006 318.Open Loop Pre-Paid Card Transactions Source: Foreign 5.4 2010 417.1 5.6 12.8 16.6 7.2 95.8 4.2 12.4 1.4 6.2 6.4 Euromonitor International from official statistics.0 52.0 2009 81.9 15.3 93. company research.Other Paper Payment Types Consumer Payment Transactions 292. company research.6 100.6 6.0 100.3 29.3 100. trade associations. trade interviews.3 307.0 94.6 100.1 40.7 282.8 25.3 98.0 64.6 Other Charge Card Transactions Credit Card Transactions Debit Transactions Open Loop Pre-Paid Card Transactions Source: Total 100. trade sources MARKET DATA Table 8 £ bn 2005 Card Payment Transactions (Excl Commercial) Electronic Direct/ACH Transactions Paper Payment Transactions .5 267.6 16.8 6.3 301.5 100. company research.0 29.0 58.8 94.4 19.2 34. trade press.0 45.8 25.6 325.Credit Card Transactions .5 721.3 Euromonitor International from official statistics.3 1.6 266.0 Euromonitor International from official statistics.1 252.

845.4 66.0 23.624.0 986.8 55.9 Euromonitor International from official statistics.5 2. trade interviews.271.968.5 28.7 19.7 21.428. company research.894.313.9 3.2 2007 6.6 69.0 762.0 23. trade press. trade interviews.151.9 176.5 2010 8.9 2010 159.437.7 228.9 50.210.230.7 107.490.229.4 524.0 25. trade associations.2 69.8 30.Financial Cards and Payments United Kingdom Source: Euromonitor International from official statistics.243.0 23.199.987.454.0 191.544.997.408.231.668.3 83.0 34.0 22.6 2.9 526.875.0 1.549.468.0 15.817.3 14.0 207.084.7 3.908.947. trade associations.348.5 228.0 15.Pre-Paid Transactions .5 235.849.0 567.3 3.8 68.0 23.2 10.5 3.0 16. trade associations.0 2.Charge Card Transactions .0 26.3 164.0 33.836.7 2009 192.072.0 76.9 380.8 2008 192.898.6 2008 168.7 80.0 24.6 2009 162.4 113.0 3.220.9 599.5 22. trade press.2 407.579.4 33.231.8 10.0 202.0 5.6 11.8 413.1 644. trade associations. trade press.9 3.1 290.6 2009 8.497. company research.454.871.6 66.2 6.069.8 2.354.4 21.0 8.3 58.957.513.3 109. company research.4 442.2 105.319. trade interviews.8 7.094.394.539.Other Paper Payment Types Consumer Payment Transactions Source: 2006 6.2 Euromonitor International from official statistics.927.5 221.034.8 488. trade sources Table 11 £ bn Financial Cards Transactions: Value 2005-2010 2005 ATM Transactions Card Payment Transactions .110.4 106.600.942.443. trade sources Table 9 Consumer Payments: Number of Transactions 2005-2010 Million transactions 2005 Card Payment Transactions (Excl Commercial) Electronic Direct/ACH Transactions Paper Payment Transactions .990.1 71.303.991.2 3.8 20.177.3 3.7 5.Cash Transactions .7 4.2 316.0 12.Credit Card Transactions .1 110.6 249.0 17.0 38. trade sources Table 10 '000 cards Financial Cards: Number of Cards in Circulation 2005-2010 2005 ATM Function Charge Card Function Credit Function Debit Function Pre-Paid Function Store Cards Financial Cards in Circulation Source: 2006 164.9 32. trade sources Table 12 Financial Cards: Number of Transactions 2005-2010  Euromonitor International Page 10 . trade interviews.9 2010 202.5 34.9 344.2 67. trade press.4 655.1 28.8 62.637.558.8 264.331.0 3.7 4.760. company research.7 2007 186.0 33.718.179.710.987.376.8 6.799.365.014.1 Euromonitor International from official statistics.4 2007 165.9 172.569.9 3.1 26.0 33.3 2008 7.800.5 605.Debit Transactions .9 5.934.3 5.0 199.Store Card Transactions Total Cards Transactions Source: 2006 179.0 1.9 33.504.

4 2.5 5.391. trade associations.8 298.921.2 4.8 83.4 7.3 6.062.4 19.7 279.810. trade interviews.3 2.0 44.843.243.5 5.180.497. company research.5 15.961.0 2.2 308.9 14.1 11.0 16.954.938.1 55.469.9 1.904.3 14.675.269.324.0 6.1 233.0 89.Pre-Paid Transactions .2 4.5 247.731.9 2.3 30.7 1.1 18.124.4 23.3 968.1 Euromonitor International from official statistics.6 867.0 31.350.910.4 4.8 18.7 2.9 3.472.830.344.0 92.0 3.0 1.0 Euromonitor International from official statistics.256.552.557.4 13.363.4 3.354. company research.181.8 2008 2.388.Credit Card Transactions .664.690.2 861.959.090.959.4 2.384.5 5.866.050.0 294.0 30.0 2.1 9.104.100.2 4.1 4.9 3.2 11.1 26.349.202.5 2009 4.8 30.2 36.4 2.400.149. trade press.964.1 6.0 41.089.102.9 6. trade sources Table 13 '000 accounts Financial Cards: Number of Accounts 2005-2010 2005 Charge Card Function Credit Function Debit Function Store Cards Financial Cards in Circulation Source: 2006 3.144.955.650.3 15.593.3 2.4 2.824.Financial Cards and Payments United Kingdom Million transactions 2005 ATM Transactions .3 89. trade associations.9 4.195.687.363.3 2010 2.4 1.800.5 3.904.456.893.001.0 2007 4.039.872.0 3.4 3.390.1 13. trade sources Table 14 '000 cards Company Financial Cards: Number of Cards by Issuer 2005-2009 2005 24.844.9 5.367.8 2.1 2.0 89.110.400.211.3 14.Debit Transactions .0 2007 23.0 2.0 6.3 88.9 9.669.891.570.6 2009 23.550.4 6. The Tesco Personal Finance Plc LaSer UK First Direct Alliance & Leicester Plc Citigroup Inc J Sainsbury Plc Home Retail Group  Euromonitor International Page 11 .2 13.0 6.554.960.0 Barclays Group Plc Royal Bank of Scotland Group Lloyds TSB Group Plc Bank of Scotland plc HSBC Bank Plc Abbey National Plc Transport for London MBNA America Bank NA (MBNA) Nationwide Building Society Santander UK plc Marks & Spencer Financial Services Plc Clydesdale Bank Plc Capital One Bank (Europe) Plc American Express Co Co-operative Bank.2 67.0 2.350.5 1.742.7 16.Store Card Transactions Total Cards Transactions Source: 2006 2.0 13.125.624.8 1.7 268.567.255.3 5.669.331.727.Charge Card Transactions .5 42.683.8 9.264.1 23.0 1.641.9 2.905.0 30.178.102.8 61.0 13.377.7 2.6 170.0 2008 4.871.200.3 5.370.0 6.3 6.876.4 4.350.138.4 24.847.3 3.9 66.5 2.349.3 6.937.0 6.4 3.8 22.540.210.418.018.362.866.299.961.2 2.163.5 7. trade press.120.0 41.9 32.3 1.957.7 2.841.0 2010 3.5 2.400.0 - 2006 24.0 2.017.907.8 3.4 2.9 46.9 19.4 8.882.758.841.515.259.2 1.031.600.513.600.2 4.6 881.4 2.4 2.059.5 119.815.8 2.3 1.921.518.1 301.076.176.8 20.8 4.518.5 1.8 1.031.1 4.6 5.880.0 40.4 1.0 2.0 11.4 5.456.285.7 2007 2.0 5.714.081.858.068.0 2009 2.355.4 1.800.0 31. trade interviews.565.5 43.700.0 2008 23.831.4 2.2 982.810.1 14.3 861.9 4.8 2.681.190.000.0 89.7 1.364.0 12.041.801.591.6 10.

4 72.0 122.7 45. company research.0 421.507.0 1. trade interviews.9 58.Financial Cards and Payments United Kingdom Ikano Financial Services Ltd John Lewis Partnership Plc National Grid plc Diners Club UK Ltd GE Capital Bank Ltd Creation Financial Services Ltd GUS plc Transco Metering Services Ltd Others Total Source: 755.288.9 49.0 Visa Europe MasterCard International Inc American Express Co Transport for London Diners Club UK Ltd National Grid plc Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.4 595.580. trade press. trade associations.0 4.582.4 57.0 1.0 331. trade press.8 11.499.8 4.7 2006 190.5 6.515.211.250.8 2008 224.7 1.1 4.5 918.520.579. company research.1 134.0 395.8 Royal Bank of Scotland  Euromonitor International Page 12 .961.016.643.030.686.879.3 157.456.841.0 630.0 401.955.9 9.977.576.8 199.236.6 413.091.817.0 380.9 6.230.0 4.4 696.817.5 5.609.0 207.909.0 3.3 3.105.4 595.0 35.0 407.9 634.378.8 1.6 671.0 541.0 13.0 564.490.898.176.9 1.5 199.3 69.9 Euromonitor International from official statistics.548.9 6.0 2. trade press.504.0 2007 59.439.170.7 7.742.7 675.084.335.997.3 344.289.708.086.093.8 47.2 2006 59.0 191.8 2.0 2008 60.1 673.044.523.0 1.735. trade associations.2 62.696.0 2009 60.311.6 783.380.591.9 845.084.653.3 207.650.0 883.6 1.068.376.0 3.2 2007 207.1 605.2 158.479.6 2009 77.5 11.068.8 1. trade interviews.2 67. trade sources Table 15 '000 cards Company Financial Cards: Number of Cards by Operator 2005-2009 2005 85. trade sources Table 16 £ million Company Financial Cards: Card Payment Transaction Value by Operator 2005-2009 2005 177.641.2 671.285. trade sources Table 17 £ million Company Financial Cards: Card Payment Transaction Value by Issuer 2005-2009 2005 53.3 65.954.3 757.6 15. trade associations.3 228.0 6.504.307.169.0 316.8 2.975. company research.5 645.2 221.0 605.368.8 2009 231.4 2007 78.0 2.0 401.056.2 6.2 624.3 54.1 6.4 630.361.757.3 600.0 307.931.074.713.161.0 307.067.925.432.6 674. trade interviews.9 Visa Europe MasterCard International Inc Transport for London American Express Co National Grid plc Diners Club UK Ltd Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.517.039.490.0 1.485.1 2006 82.0 2.7 221.5 620.6 1.683.3 2.4 600.147.345.7 228.455.8 67.3 150.1 191.866.3 5.2 54.7 3.0 331.6 2008 78.421.579.5 42.

7 417.5 5.775.7 15.188.3 9.376.757.0 2013 507.4 9.411.0 1.5 14.0 555.7 624.858.3 29.9 407.592.2 53.068.379.9 5.9 204.761.6 210.9 1.0 13.6 1.6 49.6 4.5 7.6 1.2 2.0 1.270.544. trade sources Table 19 Consumer Payments Forecast: Number of Transactions 2010-2015  Euromonitor International Page 13 .450.0 4.0 6.3 97.668.250. trade associations.879.1 202.9 44.056.8 7.0 Euromonitor International from official statistics.576.206.633.2 811.866.2 795.447.3 6.5 3.587.0 32.206.115.910.Other Paper Payment Types Consumer Payment Transactions Source: 2011 442.267.6 864.9 793.1 40.112.4 5.7 234.2 93.2 211.9 106.0 235.974.5 4. company research.536.5 510.5 4.2 39.9 38.0 6.685.5 1.1 221.8 238.182.3 5.7 9.2 5.0 5.7 4.2 4.5 5. The Alliance & Leicester Plc Capital One Bank (Europe) Plc Citigroup Inc Marks & Spencer Financial Services Plc Transport for London Newcastle Building Society Diners Club UK Ltd J Sainsbury Plc Santander UK plc National Grid plc LaSer UK John Lewis Partnership Plc GE Capital Bank Ltd Creation Financial Services Ltd Transco Metering Services Ltd Others Total Source: 44.621.1 11.2 52.744.717.4 5.1 210.711.673.727.7 6.368.881.8 10.1 403.8 9.9 24.078.7 48.0 11.063.2 1.275.2 11.9 1.888.4 38.781.201.4 12.0 4.1 38.4 27.445.215.5 455.252.0 293.356.2 37.3 1.108.0 889.4 1.5 14.5 4.686.812.640.2 14.2 1.707.023.9 316.719.825.2 16.1 5.034.292.2 30.2 1.4 2.0 7.0 10.7 5.650.975.091.5 11.7 937.7 18.9 5.791.099.2 133.6 675.738.3 5.0 262.0 253.364.4 10.7 33. trade interviews.797.995.1 37.6 6.467.475.1 4.3 6.0 634.8 56.091.145.388.090.086.3 2015 553.286.7 5.0 1.0 3.972.2 4.Financial Cards and Payments United Kingdom Group Lloyds TSB Group Plc Barclays Group Plc HSBC Bank Plc Bank of Scotland plc Abbey National Plc Nationwide Building Society American Express Co Clydesdale Bank Plc MBNA America Bank NA (MBNA) Tesco Personal Finance Plc First Direct Co-operative Bank.3 413. trade associations. trade sources Table 18 £ bn Consumer Payments Forecast: Value 2010-2015 2010 Card Payment Transactions (Excl Commercial) Electronic Direct/ACH Transactions Paper Payment Transactions .6 30.7 2014 536.3 380.997.180.7 1.324.529.2 344.2 671.8 1.2 1.738.575.395.6 49.531.0 3. trade press.8 Euromonitor International from official statistics.421.349.746.544.0 1.2 9.485.1 252.643.8 486.945.1 221.8 56.101.725.6 7.800.4 117.8 36. trade press.8 43.2 191.0 33.0 1.543.900.863.3 6.6 5.0 6.426.9 571.694. company research.0 671.1 260.9 200.5 1.103.165.551.7 13.725.1 2012 476.Cash Transactions .264.6 10. trade interviews.0 1.0 93.4 835.656.9 8.169.7 18.394.4 41.152.0 17.396.948.7 282.

126.3 2015 208.9 5.0 3.3 46.Charge Card Transactions .4 53.893.898.2 5.419.3 589.1 570.374.444.646.1 2012 210.9 5.Pre-Paid Transactions .6 88.0 8.579.603.429.9 342.668.4 103.8 16. trade sources Table 22 Financial Cards Forecast: Number of Transactions 2010-2015 Million transactions 2010 ATM Transactions .1 112. company research.894.696.8 371.3 31.Cash Transactions .6 2012 9.593.2 4.7 504.2 5. trade sources Table 21 £ bn Financial Cards Forecast: Value 2010-2015 2010 ATM Transactions Card Payment Transactions .842.1 644.4 16.210.428.1 30.1 117.2 99.6 468. trade interviews. trade associations.6 2012 2.094. trade associations.084.9 159.9 3.8 20.8 406.909.2 182.4 17.117.534.8 307. trade interviews.320.1 7.9 54.8 1.584. trade press.558.9 101.9 526. trade sources Table 20 '000 cards Financial Cards Forecast: Number of Cards in Circulation 2010-2015 2010 ATM Function Charge Card Function Credit Function Debit Function Pre-Paid Function Store Cards Financial Cards in Circulation Source: 2011 160.871.714.262.9 115.1 1.3 317.6 11.3 13.8 94.6 2015 11.9 122.Store Card Transactions Total Cards Transactions Source: 2011 208.675.9 34. company research.7 19. trade press.1 274.5 14.8 7.870.5 2015 2.799.005.3 98.5 2012 162.3 8.7 296.5 29.601.6 16.138.3 2014 10.4 395.4 286.9 15.0 31.6 2.345.0 54.5 55.486.0 798.774.4 442.696.5 1.9  Euromonitor International Page 14 .3 83.6 4.237.9 5.4 411.194.8 74.2 312.022.1 301.3 Euromonitor International from official statistics.7 84.795.7 246.0 2015 182.348.Debit Transactions .017.6 31.790.623.504.987.5 261.421. trade press.Charge Card 2.4 2011 2.311.0 103.2 1.5 284.Other Paper Payment Types Consumer Payment Transactions Source: 2011 9.7 1.5 19.0 2013 166.2 103.3 36.8 5.585.2 202.592.849.652.1 32. trade interviews.131.7 2013 10.8 121.1 17.068.3 3.3 749.9 332.2 16. company research.0 2014 2.574.4 7.872.458.Credit Card Transactions .666.567.8 344.1 290.1 110.2 779.059.3 53.649.5 28.8 62.376.8 18.0 9.Financial Cards and Payments United Kingdom Million transactions 2010 Card Payment Transactions (Excl Commercial) Electronic Direct/ACH Transactions Paper Payment Transactions .513.6 31.647.5 235.5 2014 209.9 38.0 2013 2.8 93.2 2014 173.528.8 15.4 354. trade associations.6 12.2 18.775.671.4 17.6 538.9 Euromonitor International from official statistics.9 3.8 10.662.5 714.182.750.845.9 Euromonitor International from official statistics.884.9 32.8 55.450.446.910.7 677.272.8 2013 210.

0 2013 4.1 2.597.3 89.1 96.714.024.955.711.8 13.934.2 36.0 33.2 308.2 52.Store Card Transactions Total Cards Transactions Source: 1. company research.228.911. trade associations.Credit Card Transactions .808.8 6.0 44. trade sources Table 23 '000 accounts Financial Cards Forecast: Number of Accounts 2010-2015 2010 Charge Card Function Credit Function Debit Function Store Cards Financial Cards in Circulation Source: 2011 3.Pre-Paid Transactions . Credit Function Credit cards allow for purchases against a preapproved line of credit.788.1 52.483.377.354.Financial Cards and Payments United Kingdom Transactions .2 2. trade press.8 Euromonitor International from official statistics.960.5 97.340.4 32.2 499.041.156. Debit Function Debit cards merge the functionality of both an ATM card and direct payment from a bank account (a check substitute in some markets).366.1 6.0 92. The account holder has the choice of whether to pay off the entire balance or opt for monthly installments with the balance serving as revolving credit. Since the funds are removed from a bank account.9 396. For the purposes of the study.615.9 33.3 6.4 780.8 30.129.742.343. A debit card transaction involves the automatic withdrawal of funds from the cardholder’s demand deposit bank account (checking or giro). the market has been defined as follows: • • • • • • ATM Cards Debit Cards Credit Cards Charge Cards Pre-paid Cards Store Cards Atm Function An ATM card (also called a cash card.3 7.9 Euromonitor International from official statistics.442.2 11. company research.5 31. trade press.7 2012 4.005.6 6.590.6 24. as well as pay for goods and services.612.1 49.937.452.1 13. reward cards and types of co-branded cards.7 2.5 15.6 7.846.1 700.5 7.9 18.5 7.961. trade sources DEFINITIONS This report analyses the market for Financial Cards and Payments in the UK.2 607.3 94. trade interviews.6 51.847.339.5 12.2 12. Credit cards can include affinity cards. A debit card allows the cardholder to receive cash and monitor account activity at an ATM machine.0 29.132.490.7 8.064.616. trade associations.344.458.4 20.925.1 47.585. Co-branded retailer  Euromonitor International Page 15 .9 3. trade interviews.1 2014 4.645.958.7 2015 4.301.4 2.228.7 6.Debit Transactions .0 7.8 2.696.8 9.4 31.852. no interest is charged on payments.6 91. cash dispenser card or cash machine card) enables access to an ATM machine in order to receive cash or monitor account activity.162. Functionality is limited to withdrawals and services available via an ATM machine.251.9 13.

They can be either network-branded cards or a chip that is attached to another type of card (typically debit). The card statements also provide companies with a record-keeping benefit. Insurance. Commercial Charge Cards A commercial card is issued to a business for use in paying expenses such as travel and entertainment and supplies. and Employee Benefits cards. corporate. store cards must contain usage limited to purchases at specific stores within a predefined retail group. Charge cards do not offer a revolving credit facility. However. Charge Card Function A charge card shares the “pay later” component with credit cards. Store Cards A store card (also known as a retailer or private label card) contains a “pay later” component similar to credit cards. but not all general purpose reloadable cards can be used to withdraw funds at an ATM. Commercial cards allow employers to closely monitor how employees allocate company funds. fleet and purchasing. Remittance. Closed Loop Pre-paid Function The closed loop pre-paid card/ function category includes Merchant Issued Gift. general purpose reloadable prepaid cards serve as a general cash substitute for consumers and are not intended for a specific purpose such as a gift. Usage of these types of cards is restricted to a “closed” network of pre-defined acceptance points and locations. Commercial Credit Cards A commercial card is issued to a business for use in paying expenses such as travel and entertainment and supplies. Parking and Toll. Commercial credit cards provide companies with a revolving line of credit. They can be loaded and reloaded with funds and used to make purchases at a POS terminal. Transportation. Network Branded Gift. Pre-paid General-Purpose Reloadable Sometimes known as ‘e-purses’ or ‘e-wallets’.Financial Cards and Payments United Kingdom cards—issued by retailers acting as financial institutions and without usage restrictions—are included in this category. fleet and purchasing. including Germany’s Geldkarte and France’s Moneo. Travel. Healthcare. Types of commercial credit cards may include small business. The card statements also provide companies with a record-keeping benefit. Debit cards with an overdraft function are not counted as cards with a credit function. Several markets have national chip-based e-purse or e-wallet schemes. Open loop pre-paid cards are network-branded cards or national e-purse chips and do not possess any acceptance point restrictions other than those of the network or e-purse brand. Payroll. Credit cards issued by retailers acting as financial institutions and without usage restrictions fall into the credit card category. Types of commercial charge cards may include small business. Note: This category does not include phone cards. corporate. Cards issued by a retailer with usage limited to a specific store within a predefined retail group fall under the store cards’ definition. However. charge card balances normally have to be paid off in full monthly and do not attract interest charges. Government Benefits. Commercial cards allow employers to closely monitor how employees allocate company funds. some. Open Loop Pre-paid Function The open loop pre-paid card/function category contains General-Purpose Reloadable (including electronic purses).  Euromonitor International Page 16 .

Network Branded Gift cards Similar to merchant issued gift cards. Despite these restrictions on purchasing. Government benefit cards Government benefit cards include any public welfare benefits such as Social Security or child benefit payments. These gift cards are only redeemable at a specific retail outlet or limited to a specific retail group.Financial Cards and Payments United Kingdom Payroll cards Payroll cards serve as a substitute to a check or direct deposit and provide employees with access to their salary or wages via ATM withdrawals and purchases. Employee benefits cards Employee benefits cards function as part of an employee’s compensation and cover areas such as food and fuel. These cards are not linked to a bank account. one-off and final salary payments. these cards offer an open loop provision which provides access to an operator's merchant network. Travel cards Travel cards serve as an alternative to travelling with cash or travellers cheques. Remittance payment cards Money transfer cards used for sending funds primarily cross-border. Unlike retail merchantissued gift cards. They are marketed to be intended as gifts and their design characteristics often focus on occasions. These are not to be confused with corporate gift cards which serve as part of an employee incentive or reward programs. staff relocation cards and staff allowance cards. Exclusions may apply including the type of stores available for use and the type of merchandise available for purchase. Cards intended to acknowledge employee achievement or act as an incentive are counted as gift cards. Transportation cards Transportation cards are foremost e-tickets that allow access to public transportation. itinerant and short-term hire/contract staff and expense payments. these cards are cataloged as open loop due to the presence of the network branding and ability to purchase from a somewhat limited variety of merchants. such as birthdays or weddings. Healthcare cards This card provides cardholders access to their health insurance accounts without the need to fill out claim forms for reimbursement of expenses. but the loaded value can be accessed via ATMs. They should not be confused with charge cards which may be referred to as travel and entertainment cards. MasterCard or American Express) allow the cardholder to purchase goods and services up to the value of the card. damaged and stolen goods. network branded open loop gift cards (Visa. Insurance claim cards Insurers issue these cards to claimants as a means to help replace lost. Merchant Issued Gift cards A closed loop prepaid card issued by a retail outlet that allows the cardholder to purchase goods and services up to the value of the card. prescriptions and approved over-the-counter items. These cards offer a similar level of security to travellers cheques in that they can be easily replaced if lost or stolen. These cards serve as  Euromonitor International Page 17 . Highest usage of these cards occurs in populations such as migrant workers looking to send money back to their families. The card is limited to payment to medical providers. Payroll cards are most often used for the unbanked.

Operation of personal transport Consumer expenditure on operation of personal transport equipment consists of consumer expenditure on spare parts and accessories for personal transport equipment. as long as the transaction runs over a card payment network. Innovative players have expanded the functionality to include use as a substitute for small ticket items usually reserved for cash transactions. This allows the contactless card to function within a range of the reader (typically inches) instead of requiring contact between the two devices. Household goods and services  Euromonitor International Page 18 .g.. multipurpose cards such as Oyster and Octopus. telephone or fax. while radio frequency identification (RFID) enabled cards allow drivers to pass quickly through tolls. data storage and processing. Tobacco Expenditure on food. supermarket). by mail. Parking cards typically fund electronic meters. As such. Alternate payment instrument forms such as key fobs. maintenance and repair of personal transport equipment and other services in respect of personal transport equipment. Contactless Smart Card Both the contactless card and the reader employ antennae to transmit data back and forth via radio frequencies. Parking and toll collection cards Parking and toll collection cards afford drivers convenience and speed in not having to locate coins and small paper denominations. Beverages.Financial Cards and Payments United Kingdom substitutes for bus tokens and train tickets. fuels and lubricants for personal transport equipment. Card Expenditure by Sector Food. Card holder not present Transactions which occur without the card or cardholder present at the point-of-sale. Funding occurs through a link to a credit or debit account or through vending machines/kiosks typically located on-site at the bus or train stations. smart cards offer enhanced security by carrying the information on the card itself instead of accessing a remote database. mini cards attached to key chains and toll payment devices are included in this category. These cards are funded either by a preset credit or debit account or using machines located at terminals or other varied locations (e. Contact Smart Card A smart card contains an integrated circuit—either a memory or microprocessor—used for identification. If toll payment happens via a contactless plastic device attached to the car’s windshield instead of via a plastic card. Card Expenditure by Location Card holder Present Transactions accompanied by the cardholder or card at the point-of-sale.” Contact smart cards typically possess a gold plated contact plate on the surface which must come into contact with a smart card reader in order to facilitate communication of data and commands. Smart cards are also referred to as “chip cards. which serve primarily as a means to gain access to public transportation. Examples include orders over the Internet. Magnetic stripe cards are vulnerable to tampering and identity theft through equipment readily accessible to fraudsters. While a card reader is required to transfer data to and from a central computer. non-alcoholic and alcoholic beverages and tobacco brought into the home. it can still be considered a prepaid card and its transactions can be considered prepaid card transactions. are considered transportation cards.

Purchases of transport services are generally classified by mode of transport: rail travel. glassware. mail order and telephone order). motorcycles and other vehicles. recreational and cultural services. Counterfeit cards are also referred to as cloned or skimmed cards. Card stolen or lost in the post Any card that is stolen in the post and used without the authority of the issuer. snacks. Clothing and footwear Expenditure on clothing and footwear. embossed or encoded so as to appear to be a legitimate card. Examples include phishing and any other method whereby the fraudster uses the card information without ever taking possession of the card. buses. coaches and taxis. Card lost or stolen Any card that is stolen or lost and used without the authority of the issuer. School transport services are included.Financial Cards and Payments United Kingdom Expenditure on furniture and furnishings. but ambulance services are excluded (consumer expenditure on outpatient services). a card which has been subsequently embossed or encoded without the authority of the issuer. Transport Expenditure on: purchase of cars. other major durables for recreation and culture. Costs of meals. drinks. household appliances. books and stationery and package holidays. magazines. tableware and household utensils. refreshments or accommodation services have to be included if covered by the fare and not separately priced. If separately priced. air travel and other travel. ID fraud  Euromonitor International Page 19 . newspapers.g. other recreational items and equipment. Card not present Unauthorized transactions that occur without the merchant having access to the physical card (e. household textiles. carpets and other floor coverings. Domestic Versus Foreign Domestic spend Any purchase made in the country where the card has been issued Foreign spend Any purchase made outside the country of issuance Value Lost To Fraud Counterfeit cards Counterfeit cards include the following: a dummy or fake card that has been printed. photographic and information processing equipment. hardware and DIY goods. a card that has been validly issued but subsequently altered or re-encoded. Leisure and recreation Expenditure on audio-visual. gardens and pets. operation of personal transport equipment and transport services. these costs have to be classified in consumer expenditure on catering. household and domestic services.

Any fraud that occurs with an existing account or card does not belong in this category. ID fraud must involve the opening of a new card account with a stolen ID. Explanations of words and/or terminology used in this report are as follows: • Enter local word/terminology and explanation Sources used during research include the following: Summary 1 Official Sources Research Sources Bank of England Competition Commission European Payments Committee European Payments Council Monopolies & Mergers Commision National Statistics Offices Office of Fair Trading Transport For London Trade Associations APACS British Bankers' Association British Retail Federation Council of Mortgage Lenders SplashPlastic Trade Press Card World Convenience Store News European Card Review Financial Times Guardian Unlimited Marketing Source: Euromonitor International  Euromonitor International Page 20 . not the unauthorized use of an existing account or card.Financial Cards and Payments United Kingdom The unauthorized use of an individual’s information in order to obtain financial cards in their name and saddle them with the debt obligation.

 Euromonitor International Page 21 .Financial Cards and Payments United Kingdom FINANCIAL CARDS AND PAYMENTS IN THE UNITED KINGDOM . Following its recent government bailout. personal finance including current accounts. London. a significant proportion is now owned by the UK Government following its bailout of the bank.1 billion 70. However. a situation made even more likely by the undertakings which were associated with the state aid obtained as part of the bailout.COMPANY PROFILES LLOYDS TSB GROUP PLC .CONSUMER FINANCE .2 billion Operating profit 2009 £45. personal loans and mortgages.8 billion Source: £1. the ownership structure of Lloyds Banking Group.3 billion £0. Lloyds Banking Group PLC is now 41. wholesale banking and corporate finance Euromonitor International from company reports. Lloyds TSB’s recent strategy has focused on the reorganisation of its branch network as well as bringing down costs by eradicating any duplication of roles.3% owned by the UK government. may affect the operational flexibility of Lloyds TSB during the forecast period.lloydstsb. trade press Full name of company: Address: Tel: www: Activities: Source: Summary 3 Lloyds TSB Group Plc: Operational Indicators 2007 2008 £8. which is listed on the London Stock Exchange.000 Net sales £18.com Internet and telephone banking. a position which has been strengthened in the long term by its recent acquisition of HBOS. savings accounts. The company’s focus remains on consolidating its positions in the financial markets in which it is involved.3 billion £4. company research Number of employees Company Background • Lloyds TSB Group Plc is a wholly owned retail banking subsidiary of Lloyds Banking Group PLC. credit cards.UNITED KINGDOM Strategic Direction • Lloyds TSB Group Plc was one of the British banks worst affected by the credit crisis which first hit the UK in 2008. The effects of the crisis forced a change in the bank’s strategy and its lending is now decidedly more conservative than before. This followed the enlargement of the bank’s parent group in a bid to offset the high number of bad debts and mortgage writedowns the bank faced during 2008 and 2009. insurance and investment banking. Key Facts Summary 2 Lloyds TSB Group Plc: Key Facts Lloyds TSB Group PLC 25 Gresham Street. EC2V 7HN +44 20 7626 1500 www.0 billion Trade press.

far more standardised. as the report is likely to contain recommendations for changes in the banking sector. although there is some danger that if the interests of the government differ from that of the bank. Following Lloyds TSB’s acquisition of HBOS in January 2009. However. comprising Lloyds TSB. savings and credit cards. middle income earners and so-called ‘platinum’ cards for high earners. Lloyds Banking Group was directed by competition authorities and the UK Government to divest itself of its Scottish branch network. Bank of Scotland and Scottish Widows. Lloyds is among the few consumer finance companies in the UK to offer air miles as a reward for card purchases. it is unlikely that there will be any sale of shares before the Independent Commission on Banking publishes its report in September 2011. HBOS comprised two prominent retail banking brands. The government’s interest in the bank has been stipulated to be purely as a shareholder. Halifax. affecting the valuation of Lloyds TSB group. However.1 million in 2009 to 19. Lloyds TSB is a leader in consumer finance in the UK and constantly innovates in terms of the financial cards and other financial products and services it offers. Overall. its Cheltenham & Gloucester mortgage arm and its Intelligent Finance Internet bank.Financial Cards and Payments United Kingdom • • Lloyds TSB Bank is a multifaceted retail bank which offers a wide range of financial products including mortgages. • • Competitive Positioning • Lloyds TSB was the UK’s largest issuer of debit cards in 2010. The bank offers credit cards aimed at students. In credit cards Lloyds TSB was the fifth largest issuer in 2009. the total number of financial cards issued by Lloyds TSB Group fell from 20. Lloyds TSB Group has also introduced its new Visa contactless debit card as well as maintaining its internet banking and financial services. the obligations attached to the provision of state aid will further affect the flexibility of the bank in the future. Lloyds TSB Group Plc: Competitive Position 2009 • • • • Summary 4  Euromonitor International Page 22 . Lloyds TSB is currently in talks with the British government to negotiate the government divesting itself of its stake in the bank. is the number one current account provider in the UK with 22 million customers. as well as the number one mortgage provider. On top of this. Lloyds TSB become part of the largest banking and financial institution in the UK. EU and UK competition authorities are attempting to curb the market dominance of Lloyds Banking Group and have ordered the company to divest some of its Scottish assets.4 billion. Lloyds TSB Group has undertaken a role reduction programme which led to 15. Lloyds TSB competes for business from all segments of British society ranging from the very wealthy to the very poor. Lloyds TSB has a very diverse portfolio of financial cards which are tailored to various different types of consumers. accounting for 18% of debit cards in circulation. which was itself the result of consumer suspicion and fear of the consequences of holding credit cards and was exacerbated by the effects of the economic downturn. The company is also the UK’s leading provider of social current accounts for the lowest earners. the influence that government maintains could restrict Lloyd’s options for future development. although the effect of the government intervention in the bank remains to be seen. However. Lloyds is therefore in a good position to benefit from the current conditions and trends in financial cards and payments in the UK. In a bid to streamline its operations. Lloyds TSB also claimed the largest share of debit transactions in the UK in 2010 with an 18% vale share.000 redundancies between 2008 and 2010. Lloyds TSB is at present a nationwide business with branches across the UK. Lloyds TSB has maintained its advantageous position in the wake of the economic recession and is ideally positioned to exploit the current move away from credit cards towards debit cards which has been brought on by the economic recession. however. a move which was undertaken as 318 branches were sold to Santander UK Plc. The company’s commanding position in debit cards represents a strong starting base from which to leverage full value from the move towards debit cards.8 million in 2010. This was due to the increased preference for debit cards over credit cards. following its recent acquisition of HBOS. Bank of Scotland and Halifax. loans. Asian sovereign wealth funds are being mooted as a potential source of investment capital to fund the buyout. accounting for 9% of credit cards in circulation. The company’s debit card offerings are. current accounts. The newly created Lloyds Banking Group Plc. equal to £47. Lloyds TSB’s share of financial cards issued declined marginally in 2010.

Nationalgrid.9 billion 10. Trade press. Woodsome Park.9% 8.296 2010 £5. The company has ongoing operations in the UK and the US.Financial Cards and Payments United Kingdom Product type Card payment transactions Debit transactions Credit card transactions Source: Value share 13.UNITED KINGDOM Strategic Direction • National Grid plc is in the privileged position of being able to exercise its monopoly of the UK’s energy networks. Huddersfield. Capita Registrars. Key Facts Summary 5 National Grid Plc: Key Facts National Grid Plc National Grid Share Register.7% 17. This has allowed National Grid to focus its consumer strategy on debt reduction and medium term sustainability. with changes to the number of cards sold being down to market forces rather than any explicit strategic direction from National Grid itself.com Ownership and maintenance of the high-voltage electricity transmission network and the high pressure gas transmission system.2billion in 2010 as part of a 5-year plan to invest £22billion in the UK’s gas and electricity supply network.8 billion N/A Trade press. Company research.269 Total sales Operating profit Number of employees Source: £4. a relatively small rise in the number of National Grid’s pre-paid cards is likely over the forecast period due to current economic conditions. Trade interviews.2 billion 10. However.8 billion £1.6 billion £2. National Grid Plc is the issuer and operator of pre-paid closed loop cards Euromonitor International from company reports. HD8 0LA +44 20 7098 1198 www. Northern House. Euromonitor International estimates NATIONAL GRID PLC . Company research Company Background • National Grid Plc is a publicly listed multinational company which is listed on the London stock exchange. This is because pre-paid energy cards tend to be used more by consumers who are experiencing economic difficulties.CONSUMER FINANCE . The company raised £3.  Euromonitor International Page 23 . This focus on the medium term has meant there has been little drive to push its pre-paid cards activities. Fenay Bridge.3% Rank 2 1 5 Euromonitor International.3 billion £1. Trade press Full name of company: Address: Tel: www: Activities: Source: Summary 6 National Grid Plc: Operational Indicators 2008 2009 £5. within financial cards.

Furthermore. The expansion of the European Union in 2004 brought many new immigrants to the UK from Central and Eastern Europe. adverse economic factors have affected pre-paid cards. National Grid is also attempting to drive down operating costs for increased efficiency across its networks. According to Sustainability First. National Grid’s share of pre-paid cards declined continuously over the review period. The recent increases in energy prices in the UK have had little effect on National Grid in 2010 as these costs have been passed onto consumers. according to the National Grid the size of its debt is on the decrease.Financial Cards and Payments United Kingdom • National Grid is the owner and operator of the high voltage electricity transmission network and high pressure gas transmission system in England and Wales as well as operating the energy supply system across the UK. any increases in the number of pre-paid cards which the company issues will be down to market forces rather than any concerted effort by National Grid Plc to increase its customer base. National Grid’s pre-paid cards operations are part of the company’s metering division. the proliferation of pre-pay energy customers has coincided with a massive reduction in energy disconnections. The majority of users of the pre-paid household energy system are therefore low income consumers with 52% of users coming from the two lowest socio-economic bands in the UK and 30% of single-parent families making use of the system. National Grid is currently implementing a 5-year £22 billion investment plan for the national electricity network with work taking place between May 2010 and May 2014. The lack of alternate energy sources and suppliers in the country has meant that there has been little change in overall demand for the company’s core products and services. The company also owns a number of related businesses in liquefied natural gas importation and storage. This most obvious solution to this problem is provided by pre-paid cards for household energy credit. heavy investment in its energy networks is likely to maintain the company’s sustainability during the forecast period and further into the future. the company’s investment in sustainable and renewable energies in order to meet national targets for 2020 demonstrates its commitments to its long term future. there has been a consistent year-onyear decline in the percentage of the UK population that is banked. which puts people more at risk of missing payments for their energy bills. although this was mainly due to the high increase registered in other kind of closed loop pre-paid cards. in which it operates. Moreover. land remediation and metering. Even with National Grid Plc benefiting from its monopoly position. National Grid has a very small remit in financial cards and payments as its primary focus is energy development and its options for growth in financial cards and payments remains very limited. Since 2006. younger demographic. reliability and safety. This contributed to a reduction of the UK banked population as the Central and Eastern European immigrant population tends to be characterised by a lower income. National Grid Plc: Competitive Position 2009 Value share Rank • • • • Summary 7 Product type  Euromonitor International Page 24 . accounting for 1% of total pre-paid cards in circulation in 2009. Furthermore. which has contributed to an increase in the market for pre-paid cards for the purchase of household energy credit. However. Therefore. National Grid Plc’s position in closed loop pre-paid cards is relatively stable. National Grid holds a complete monopoly over the supply of energy in the UK and faces no competition. National Grid has a low risk profile and its monopoly position in terms of ownership of the energy supply networks in England and Wales has allowed its strategy to focus on medium term goals with the emphasis very much on efficiency. The customers for National Grid’s closed loop pre-paid cards tend to be lower income consumers and unbanked consumers as well as those who are for any reason unwilling to commit to debit transactions for the payment of their bills. The pre-paid card system for household energy supply is largely regarded as a solution for consumer debt problems as consumers can top up their energy cards whenever they can afford to without having to worry about being cut off from the energy supply system. Although the company holds a large debt obligation of £19 billion. the economic recession has reduced the UK average wage. • • • Competitive Positioning • National Grid is the second largest provider of closed loop pre-paid cards in the UK. sustainability.

On the positive side. NE1 8AL +44 (191) 244 2000 www. pre-paid cards. This is leading to the building society garnering Europe-wide recognition for its pre-paid card activities. Newcastle Building Society has continued to engage in product innovation in its most dynamic product category.200 Trade press. Key Facts Summary 8 Newcastle Building Society: Key Facts Newcastle Building Society Portland House. However. Newcastle Building Society traces its origins back to 1861.2% 1.1 million n/a Net sales Net profit Number of employees Source: £285. trade press Full name of company: Address: Tel: www: Activities: Source: Summary 9 Newcastle Building Society: Operational Indicators 2007 2008 n/a £15. company research Company Background • Newcastle Building Society is a mutual society wholly owned by its members. Newcastle upon Tyne.co. The company specialises in mortgages/housing loans. On top of this. Company research. although the building society’s current form is the result of a merger between the Grainger and Newcastle Permanent Building Societies in 1980.uk Pre-paid cards. The building society’s lending activities are flagging due to the decline registered in consumer lending as a result of low consumer confidence and increasing risk aversion by the building society.400 2009 n/a £0. savings and small personal loans.Financial Cards and Payments United Kingdom Pre-paid Cards Closed loop Pre-paid Cards Source: 1. mortgages and consumer lending Euromonitor International from company reports. Newcastle Building Society has a significant slice of the consumer lending business in northeastern England. the building society cut 126 jobs and closed four branches in 2010 due to what it has deemed to be the ‘challenging climate’.1 million 1. savings. which is consumer lending.UNITED KINGDOM Strategic Direction • The economic recession has proven to be both a blessing and a curse for Newcastle Building Society.3% 2 Trade press. the recession has hit the core of Newcastle Building society’s business. Trade interviews.newcastle. Euromonitor International estimates NEWCASTLE BUILDING SOCIETY . The card •  Euromonitor International Page 25 . the building society is expected to continue benefiting from the shift away from credit cards to more sustainable and manageable cashless card spending such as debit cards. New Bridge Street.CONSUMER FINANCE .8 million £12.8 million 1. on the negative side.

Newcastle Building Society has focused its energies on pre-paid cards as this segment is still relatively new and immature in the UK. Open loop pre-paid cards increased at a CAGR of 59% over the review period. is a very dynamic consumer finance category in the UK. Newcastle Building Society is well positioned as the second-largest issuer of pre-paid cards in a category which is also the fastest growing in consumer finance in the UK.Financial Cards and Payments United Kingdom solutions department of Newcastle Building Society was established in 2005 and has grown rapidly to become one of the key and elements of the business. Newcastle Building Society has consistently garnered industry praise for its card solutions division and was shortlisted for numerous awards at the Cards and Payments Awards between 2008 and 2010. Newcastle Building Society has made it clear that it will maintain its regional focus and has no plans for mergers with larger banks or competitors. The Society is continuing its efficiency drive by decreasing the Society’s cost base. accounting for 5% of all pre-paid cards issued in 2009. although this decline was attributed to the expansion experienced in pre-paid cards as the number of pre-paid cards issued by Newcastle Building Society increased by 16% in actual terms during 2009. Newcastle Building Society was forced to cut 126 jobs and close four branches in 2010 due to the fallout from its previous exposure to the Icelandic banking crisis. the position of the building society remains fragile at the start of the forecast period. Newcastle Building Society’s relatively small size.9 billion. Newcastle Building Society’s share of total card payment transactions increased steadily over the review period as pre-paid cards began to become established in the UK. Newcastle Building Society is very much a regional operator. 2. The success of Newcastle Building Society is built on constant innovation and this is evident in both pre-paid cards. However. with its strength lying in northeastern England.6 million cards. The downturn in the economy which took hold in 2008 also helped the company as consumers moved away from credit cards and debt spending and became more attracted to sustainable financial products. which precipitated the UK banking crisis in 2008. This goes hand-in-hand with the slew of industry awards that the building society the company has won recently as well as the 100 different pre-paid card products the Society has launched since its card solutions department was created in 2005. • The economic downturn which hit the UK in 2008 caused Newcastle Building Society to reappraise its business strategy. in which Newcastle Building Society is very active. Newcastle Building Society is the leader in open loop pre-paid cards in terms of cards issued. with 62% of total cards in circulation in 2009. Newcastle Building Society was also the second-largest pre-paid card company in terms of transactions value. winning awards at national level. Newcastle Building Society offers both credit and debit cards with its current accounts. the company’s services are available nationwide through its website. worth £1. Newcastle Building Society’s card solutions department was extremely innovative over the review period in launching over 100 different pre-paid card schemes including its Escape Card. both in terms of assets under management and branches has not been an impediment for the success of the company in open loop pre-paid cards. Newcastle Building Society: Competitive Position 2009 • • • • • Summary 10  Euromonitor International Page 26 . • • Competitive Positioning • Newcastle Building Society is the UK’s second largest issuer of pre-paid cards. However. which is especially impressive when compared with the growth recorded in more traditional financial cards categories such as debit cards. Newcastle Building Society’s share of pre-paid cards issued declined by five percentage points in 2009. which increased at a CAGR of 5% over the review period. Therefore. Open loop pre-paid cards. In common with many other banks and building societies. with a 20% share in 2009. Newcastle Building Society is reducing its level of lending in line with a reduction in the risk it is willing to take on. although the features for both its credit cards and the debit cards are very much standard. Of the company’s 35 branches. the vast majority are located within one hour’s drive of Newcastle upon Tyne. which allows for cheap phone calls abroad and charge-free transfers to overseas accounts. The Society’s very successful card solutions department has seen its growth stymied by the effects of the recession and the Society has been forced to scale back its staff numbers and other resources in card lending as the company returns to its core businesses of savings and housing loans. However. the Society’s managed savings arm as well as its innovative online services.

EC4M 7NJ 0845 765 4321 – general sales enquiries www.uk Retail banking. there was a 6% increase in consumer borrowing during the first half of 2010 compared to the same period in •  Euromonitor International Page 27 .5% Rank 19 2 1 Trade press. which according to the Royal Bank of Scotland will be completed by the end of 2011. Santander UK Plc is also in the process of acquiring another 318 retail branches from Royal Bank of Scotland and seven branches from NatWest. the company is in a strong position to continue with its expansion strategy. Due to Santander’s lack of exposure to the subprime mortgage crisis. Company research.co. Euromonitor International estimates SANTANDER UK PLC . asset management. Alliance and Leicester Plc. Bradford and Bingley Plc and GE Capital Bank Ltd’s UK credit card arm.5% 64. Key Facts Summary 11 Santander UK Plc: Key Facts Santander UK PLC 100 Ludgate Hill. Santander has been actively increasing its levels of consumer lending. These acquisitions have led to Santander becoming one of the largest retail banks in the UK. During the past seven years. trade press Full name of company: Address: Tel: www: Activities: Source: Summary 12 Santander UK Plc: Operational Indicators 2009 Gross income Net profit Number of employees Source: Trade press. insurance Euromonitor International from company reports. Along with the consolidation and integration of the company’s numerous acquisitions.5% 19. Santander has acquired four major participants in the UK financial sector: Abbey National Plc.5 billion 22.Financial Cards and Payments United Kingdom Product type Card payment transactions Pre-paid card transactions Open Loop Pre-Paid cards Source: Value share 0. The company has confirmed plans to float up to a quarter of its British subsidiary on the London stock exchange in 2011 as yet more evidence emerges of likely further acquisitions in the forecast period. According to Santander’s annual report for 2010.Santander. Trade interviews.99 Company Background • Santander UK Plc is the British subsidiary of Spain-based Banco de Santander SA.UNITED KINGDOM Strategic Direction • In 2008 Santander UK Plc successfully acquired the retail branches and savings account division of Bradford and Bingley as well as Alliance and Leicester. London. adding to its 2004 acquisition of Abbey National. wholesale banking. Company research n/a £1.CONSUMER FINANCE .

which eliminates commissions for customers who also have a mortgage or investment product with Santander. • Competitive Positioning • Thanks to the flurry of recent acquisitions which Santander UK has undertaken. its share in all core categories in financial cards and payments in the UK increased significantly. Santander UK Plc: Competitive Position 2009 Value share 0. the bank is currently dealing with fewer repossessions than the current industry average. The integration and rebranding of Alliance and Leicester Plc and Abbey National Plc was completed on the back of strong profit growth of 11% in 2010. the closure of the pre-paid cards arm of Alliance and Leicester in 2009 and the lack of alternative options may mean Santander will miss out on one of the most dynamic emerging segments in retail banking the UK during the forecast period. However. it looks likely that during the forecast period Santander will further expand into the UK. Company research. With the planned floatation.2% 37. Thanks to its large capital base. Much of this is due to the assistance that the bank provides to those experiencing what it deems ‘affordability problems’. Santander has been able to pursue a very aggressive acquisition strategy which has enabled it to rapidly obtain a large share of UK financial cards and payments with a large and varied customer base.322 branches across the UK. Santander UK Plc is the British subsidiary of Banco Santander. Santander UK is therefore cementing its position in British retail banking. However. Santander UK has had little exposure to subprime and toxic assets and growth in prime loans and the bank’s plans to float the company in 2011 means that its current position is likely to be sustainable over the forecast period. although nothing firm has been discussed as of yet. Santander has had little exposure to the toxic asset problems which numerous other large UK banks have been forced to deal with in the wake of the economic crisis as well as seeing increases in its consumer lending activities.CONSUMER FINANCE .UNITED KINGDOM Strategic Direction  Euromonitor International Page 28 . the current adverse economic situation is having a negative effect on the number of new customers Santander is able to acquire as well as the bank’s willingness to undertake any significant level of risk. Despite these potentially negative factors. according the bank’s own reports. Euromonitor International estimates TRANSPORT FOR LONDON . • Thanks to the acquisitions carried out by Santander over the review period. the bank recorded positive operational profits of EUR1. According to Santander’s results for the first quarter 2010. This represents one of the largest branch networks in retail banking in the UK. Santander UK Plc now has national coverage with 1. The likely reasoning behind this is to obtain funding for further acquisitions in the UK and to allow it to deal with the costs that previous acquisition processes have resulted in.Financial Cards and Payments United Kingdom 2009.6% Rank 22 1 • • • Summary 13 Product type Card payment transactions Store cards Source: Trade press.3 billion in 2009. with residential mortgages up by 6% for the same period. The company is therefore able to provide opportunities for consumers which smaller banks are unable to due to its size advantage. This innovation has put the bank in a strong position to benefit from the shift away from credit cards into debit cards. This is in addition to the numerous other concessions to customers such as its award winning Zero credit current account. Santander UK Plc finds itself in a strong position in the UK at the beginning of 2011. Trade interviews. Furthermore. the largest bank within the Eurozone by market value and the seventh largest banking group in the world. Santander has confirmed plans to float 20-25% of its equity on the London Stock exchange during the second half of 2011.

In closed loop pre-paid cards TfL. North Greenwich. by its own remit. Much of the innovation for the Oyster card has been outsourced to private enterprises such as Barclaycard. trains. Oyster was envisaged as a means of doing away with paper tickets and simplifying and integrating the fares on all London transport. trade press Full name of company: Address: Tel: Fax: www: Activities: Source: Company Background • Transport for London is a government-run public transportation company for London. which reports to the Mayor of London. public transportation Euromonitor International from company reports. However. TfL’s overall strategy for its Oyster card system is to ensure that the card allows smooth and integrated transport payment throughout London. Transport for London (TfL) is responsible for roads. buses and other modes of transport offered as part of the vast and comprehensive TfL public transport network. In 2003. Zone Y4. Oyster card penetration in London is high. TfL is also the number one pre-paid cards issuer by transaction value. TfL is less interested in leveraging and monetising its pre-paid card system. TfL is in a unique position in that it is able to manipulate the success of its pre-paid Oyster card. an innovative leader in pre-paid cards in the UK.gov. the Oyster card scheme has gained 80% penetration among transport users in London. but there is still significant room for growth.tfl. which signed an exclusive 3-year contract in 2007 to develop additional financial services for • •  Euromonitor International Page 29 . TfL quickly established itself as a major player in financial cards and payments in the UK through the introduction of its Oyster pre-paid card/ticket scheme. Since its introduction. cycle hire and all other transport-related issues in London. Key Facts Summary 14 Transport for London: Key Facts Transport for London 4th Floor.uk Pre-paid transport cards. TfL’s Oyster card is currently London-specific and only work with dedicated Oyster card readers found on the entry and exit gates in London Underground. Adjuncts to the current Oyster system such as the One Pulse card are non-core and receive no funding from TfL. reaching 80% of all London residents. TfL introduced the Oyster scheme to London after observing the effect of similarly successful schemes such as the Octopus card in Hong Kong. equating to 6. which allows for chip and pin as well as tap-and-pay functionality for purchases under £10 via the Visa PayWave system. London. SE10 0ES +44 20 7222 5600 +44 20 3054 5307 www. buses. public transport is among the few truly recession-proof expenditure items. 14 Pier Walk. TfL is not. Recent additions to the Oyster scheme include the One Pulse credit/debit Oyster card from Barclaycard and Visa. the success of these schemes is contingent on private investment and support. cycle lanes. and it is expected that this institutional lack of interest will continue into the forecast period. The added functionality of the Oyster One Pulse card has also slowly started to increase transaction spend.Financial Cards and Payments United Kingdom • Transport for London (TfL) is in a privileged position as the monopoly provider of public transport in London. with a 25% value in 2009. was again the largest issuer of cards with a 14% volume share as well as the leader in value terms. TfL’s share of both cards issued and transactions both increased incrementally over the review period.7 million cards. • • • Competitive Positioning • TfL is the UK’s largest issuer of pre-paid cards with a 13% share of all cards issued in 2009.oyster. Furthermore. As such. responsible for 36% of transactions value.

Trade interviews. the private sector will have to provide the innovation necessary to make this expansion effective. Mobile telecoms provider O2 is also trialling a mobile device with Oyster built-in. Transport for London: Competitive Position 2009 Value share 24. The lack of innovation from TfL means Oyster is presently limited as a pre-paid system.9% 35. totally captive and potentially very lucrative group of consumers for its pre-paid cards system.7% Rank 1 1 Summary 15 Product type Pre-paid Cards Closed loop pre-paid Cards Source: Trade press. The high penetration of the Oyster card coupled with its high frequency of use and its necessity to all London residents make it a prime candidate for the expansion of its currently narrow usage to make purchases. Company research. Euromonitor International estimates  Euromonitor International Page 30 . • TfL is currently sitting on a massive. for the moment.Financial Cards and Payments United Kingdom the Oyster system. However. the constraints on government budgets mean that.

This is the case with several savings accounts such as the Santander Individual Saving Accounts (ISA). holders of which receive a ‘cash card’ as proof of holding. rising to 63. In the UK. Euromonitor International’s research tracks the number of cards with ATM function rather than just the number of cards with ATM function only. Nevertheless. Therefore. The rise in consumer prices over the review period increased the average amount that Britons withdrew from ATMs. The popularity of online ticket sales through booking websites hindered the development of ticket booking services offered through ATM terminals in the UK. on which the interest earned is tax free. Euromonitor data includes all cards with ATM function regardless of other functionalities such as debit. the majority cards with ATM function share other features such as debit. the latest year from which data is available. the number of cards with solely ATM functionality continued decreasing in the UK during 2010 as consumers prefer the convenience of having access to their cash through ATMs together with debit and/or credit functions. the most a British card holder can currently do at an ATM terminal. apart from withdrawing cash. However. The number of ATM terminals in the UK increased by 1% to 63. around 97% of cash withdrawn in 2008.8 billion in 2010 while transaction volume remains static on 2. Although not widely used by the majority of British consumers.Financial Cards and Payments United Kingdom ATM CARDS IN THE UNITED KINGDOM CATEGORY ANALYSIS HEADLINES • • • • • ATM transaction value increases by 5% to £192. Fee-charging ATMs are usually situated in locations where there are no other options available. The average ATM transaction value in the UK amounted to £70 in 2010. while those within bank premises are invariably free of charge for all users. This service is quite popular in continental European countries. Although the number of ATM-only cards is falling in the UK. some banks are now issuing these instead of passbook for saving accounts. credit or pre-paid functions. and the Barclays More For More savings account. credit and even pre-paid cards. the cash-back services offered by retailers are affecting the performance of ATM transactions in both volume and value terms. is top up their mobile phone or donate money to charity.9 billion The number of ATM cards decreases by 2% to 160 million in 2010 as a result of the economic downturn The number of ATMs continues increasing in the UK.000 in 2010 The UK’s largest banks and building societies are the main issuers of ATM cards ATM cards will rise in constant value at a CAGR of 1% over forecast period while transaction volume is set to fall by 3% and the number of cards will rise by 3% TRENDS • The number of ATM cards in circulation in the UK decreased by 2% in 2010. the 4% decrease registered in the number of credit cards had a highly negative impact on the total volume of cards with ATM function in 2010. was from free-to-use cash machines.000 in 2010. This represented a continuation of prevailing trends from the review period and these trends are likely to continue over the forecast period. Many people feel it is safer and more convenient asking for cash back when purchasing goods from a supermarket rather than • • • • • •  Euromonitor International Page 31 . Machines located within small grocery retailers outlets usually charge a fee. Not even the 4% increase in the number of debit cards in circulation managed to result in positive growth. falling to 160 million. According to the Payments Council. The British banking system allows the majority of its customers to withdraw money from ATMs free of charge. This figure increased steadily over the review period.

The increasing popularity of the cash back services which are offered by retailers will also hamper the growth of ATM transaction volume and value over the forecast period. The convenience of the cash back service for customers will mean more cash is obtained when purchasing goods rather than through ATMs. movies and sporting events are likely to become standard features for ATMs during the forecast period. ATM card issuers are likely to introduce new services for their ATM cards following the success which already been noted in other Western European countries for additional services through ATM machines. This growth will be commensurate with the 1% constant value CAGR recorded over the review period. as the majority of ATMS in the UK are located within their branches. meaning that they can accept cards issued by several banks and building societies. ATM transactions is expected to increase in constant value at a CAGR of 1% over the forecast period £208. it can be stated accurately that the largest banks are the leaders in terms of ATM providers. many consumers still prefer having a passbook in which they can see all of their previous transactions recorded. other options such as purchasing tickets for concerts. Therefore. options such as topping up Oyster cards. UK cardholders are likely to continue using their ATM cards and the average amount of each withdrawal will be higher. Royal Bank of Scotland Group and Barclays Group Plc ranked among the main issuers in 20010. In places such as London. Although these cards could be presented as being safer and more secure than passbook. the closed loop card used to access public transport in the city could be an interesting option for ATM operators.Financial Cards and Payments United Kingdom withdrawing money from an ATM. HSBC Bank plc. Banks such as Santander UK plc. • • • • •  Euromonitor International Page 32 . The number of ATM terminals in the UK is expected to continue growing over the forecast period. Due to the ongoing effects of the financial crisis. • • PROSPECTS • As almost all debit and credit cards in the UK offer an ATM function. Nevertheless. Retailers usually offer up to £50 in cash back when paying with a debit card. customers can use ATMs free of charge. increasing from £70 in 2010 to £52 by 2015. rising to 183 million in 2015 due to the increasing popularity of open loop pre-paid cards which also integrate ATM function. the total number of cards with ATM function is expected to increase at a CAGR of 3% over the forecast period. regardless of whether they belong to the bank that issued their card or not. This increase will come partially as a result of ATM terminals which charge a withdrawal fee to those using them. As one of the distinctive features of the British banking system is the absence of fees charged for most services. The majority of ATMs in the UK operate within several different networks.5 billion. Growth in ATM transactions volume is expected to fall at a CAGR of -3% to 2. The number of ATM-only cards could potentially grow over the forecast period if more banks decide to replace savings account passbooks with cash cards. Although Euromonitor International does not research volume shares for ATM operators. Banks and building societies are also the leading companies with regards to ATM ownership.3 billion in 2015. large banks such as Lloyds TSB Group Plc. which changed its name from Abbey National plc in early 2010. started issuing cash cards over the review period for saving account holders instead of the more traditional savings passbooks. UK consumers are likely to change their consumptions patterns. This will also help increase both the number of withdrawals and the amount of cash withdrawn as those who have to pay a fee for using ATM terminals tend to withdraw larger amounts. COMPETITIVE LANDSCAPE • ATM cards in the UK are issued by banks and building societies. ATM cards is quite mature with little room for further growth expected over the forecast period. These cards can be used by customers to withdraw funds either at bank counters or at ATMs and have no other functionality apart from proving the identity of the account holder. with card volume share driven by banks’ volume shares of accounts held. Apart from topping-up mobile phones.

7 2007 165.1 202.609. company research. trade interviews.795.921.824.697.3 2005/10 TOTAL 8.3 210.365.6 2005/10 TOTAL -3. trade press.174.539. trade sources Table 27 % cards growth ATM Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 ATM Function Source: 2005-10 CAGR -0.881.1 2008 2.6 3.1 2014 2.8 192.2 2009 162.0 2013 2. trade sources Table 25 '000 cards ATM Cards Category Performance: Number of Cards in Circulation 2005-2010 2005 ATM Function Source: 2006 164.435.910.814.244.4 5. trade interviews.687.3 17.339. The idea is that ATM machines across the UK will automatically offer the option of making a donation to charity. trade associations. company research.9 210.7 179.435.6 -0.987.5 2010 2.Financial Cards and Payments United Kingdom • The recently elected coalition government started negotiations in late 2010 with ATM providers to make it easier for British consumers to make charity donations at cash machines. trade sources Table 28 ATM Cards Forecast Category Performance: 2010-2015 2010 2011 2.0 Euromonitor International from official statistics. trade associations. company research.7 2010 159.870.0 2015 2.987.6 Euromonitor International from official statistics.7 Euromonitor International from official statistics.2 Number of transactions (mn) Transaction value (£ mn) Source: 2.504. trade sources  Euromonitor International Page 33 . company research. trade interviews. trade press.9 Euromonitor International from official statistics.573.758.910.5 172. trade press.8 208.4 208.9 164. CATEGORY DATA Table 24 ATM Cards Category Performance: 2005-2010 2005 Number of transactions (mn) Transaction value (£ mn) Source: 2006 2.7 186.6 2009 2.945. trade associations.151. trade sources Table 26 % growth ATM Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 1. company research.6 2007 2.696. trade associations.584. trade associations. trade interviews.9 2. trade interviews.876.3 2012 2. trade press.8 209. trade press.0 2008 168.0 Euromonitor International from official statistics.0 192.0 -1.066.1 202.718.

675. trade sources Table 30 % growth ATM Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR -3.9 -3.Financial Cards and Payments United Kingdom Table 29 '000 cards ATM Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 2010 ATM Function Source: 2011 160.9 Euromonitor International from official statistics. trade sources  Euromonitor International Page 34 . trade associations.0 0.592. trade associations. trade press. company research.7 Euromonitor International from official statistics.2 2. company research.987. trade press. trade interviews.884.909.2 2013 166.1 -0. trade interviews.671.3 Euromonitor International from official statistics.8 2012 162. trade sources Table 31 % cards growth ATM Cards in Circulation Forecast Category Performance: % Growth 2010-2015 2010-15 CAGR ATM Function Source: 2010/15 TOTAL 14. company research. trade press.2 2014 173.9 2015 182.6 2010/15 TOTAL -13. trade associations.9 159.9 2. trade interviews.

This was due to many Britons reducing the amount of money spent on their personal charge cards amidst the effects of the economic recession. Reward programmes are another standard feature of charge cards. the card is issued on an invitation-only basis. This exclusivity is reflected in benefits such as no pre-set spending limit.09. the number of charge cards in circulation in the UK during 2010 decreased by 6% to 5. • • • • COMPETITIVE LANDSCAPE  Euromonitor International Page 35 . Charge cards transactions volume increased by 1% to 301 million. While the average number of charge cards per person in Western Europe is 0. This is due to the fact that many British businesses see charge cards as a way of gaining access to short term credit lines as charge card bills must be repaid in full on a monthly basis. This is mainly due to the fact that credit cards are widely available and much easier to obtain than in other Western European countries. which fell by 9% in volume during 2010. The fall in the number of charge cards in circulation was driven by the poor performance of commercial charge cards.1 billion. while transactions value fell by 2% to £28. with the Harrods American Express offering up to five Harrods Rewards point for every £1 spent in the world famous London department store. whereas in countries such as Germany commercial charge cards represent just 5% of total charge cards.Financial Cards and Payments United Kingdom CHARGE CARDS IN THE UNITED KINGDOM CATEGORY ANALYSIS HEADLINES • • • • • Charge card transactions value decreases by 2% in 2010 to £28. in the UK it is only 0. Some 57% of total charge cards in circulation in 2010 were commercial charge cards. For some of the most premium cards such as the Harrods American Express charge card. Against this background. This allows cardholders access to credit which remains unavailable with debit cards. Many British consumers decided to stop using charge cards and many banks stopped issuing them. transactions volume increases by 1% to 301 million The economic recession continues impacting charge cards in 2010 as companies cut expenditure Average spend per card increases by 4% in 2010 to £5. The proportion of charge card in the UK which are commercial charge cards fell by two percentage points during 2010 as banks continued to tighten their lending criteria to businesses during the economic downturn.200 American Express Co remains the undisputed leader in charge cards with 53% of charge cards in circulation in 2009 Charge card transactions value is set to increase at a CAGR of 7% over the forecast period while volume is set to rise at a CAGR of 3% TRENDS • The similarities between the features of charge cards and credit cards had a negative impact on charge cards during 2010. As in many other countries. The Harrods American Express card also offers the possibility of having the first six supplementary cards provided free of charge.25. Another peculiarity of financial cards in the UK as opposed to elsewhere in Western Europe is that the charges levied on commercial charge cards are greater than the charges levied on personal charge cards. charge cards in the UK are targeted towards the more affluent segments of society.4 million. Charge cards are not as popular in the UK as in other Western European countries.1 billion. Commercial charge cards were subject to higher positive growth in transactions value than personal charge cards as personal charge cards transactions value declined in 2010.

4  Euromonitor International Page 36 . Both of these advantages are expected to come to the fore over the forecast period and are likely to be decisive for consumers when deciding whether to acquire a credit card or charge card over the course of the forecast period. Nevertheless. Royal Bank of Scotland Group (RBS) and Barclays Group Plc ranked in second and third positions respectively in terms of charge cards in circulation during 2009.Financial Cards and Payments United Kingdom • American Express Co retained its leading position as the major issuer and operator of charge cards in the UK during 2009.9 billion. Charge cards is likely to remain a niche financial cards category in the UK during the forecast period. American Express Co persisted with its successful Preferred Seating marketing programme in 2010. This programme offers American Express cardholders exclusive access to a wide range of different events in the UK ranging from concerts to sports events. Visa Europe and Diners Club UK Ltd. American Express also entered into a partnership with Irish airline Aer Lingus. • • • • CATEGORY DATA Table 32 Charge Cards Category Performance: 2005-2010 2005 Number of transactions 247.5 2008 294. while Barclays held steady on 12%. especially Visa Europe and MasterCard International Inc within operators segment and Royal Bank of Scotland Group within issuers. while constant value sales are set to rise to £38. Charge cards operators in the UK is highly concentrated and there are only four companies present.6 million in 2015. Nevertheless. • • • Prospects • The number of charge cards in circulation is expected to increase at a CAGR of 1% over the forecast period to 5. the future development of charge cards in the UK is directly linked to the performance of the main player. RBS saw its value share increase by one percentage point to 14% in 2009. The fourth placed charge cards operator—Diners Club International Ltd—remained the smallest player in 2009. American Express Co’s volume share in charge cards slipped by two percentage points in 2009 due to the more positive performances of its rivals. Personal charge cards are expected to record stronger growth than commercial charge cards in terms of the number of cards in circulation during the forecast period. the undisputed leader with 53% of cards in circulation. Transactions volume is set to rise at a CAGR of 3% while constant value will increase at a CAGR of 7%.0 2010 301. During 2010. mainly due to the premium positioning of charge cards. British consumers are likely to be attracted to charge cards due to the fact that charge cards require the bill to be paid in full at the end of each month and therefore they will be seen as a lower risk option in comparison with credit cards. accounting for a 7% share of cards in circulation. which will have to work hard to maintain its leading position. This will be especially true in terms of American Express Co’s position as the leading issuer of charge cards as more banks will be inclined to launch their own charge cards in order to attract more consumers once the economic recovery begins in earnest. American Express Co.3 2006 268.8 2007 279. The number of charge cards transactions is expected to reach 355 million in 2015. although commercial charge cards will retain the upper hand in terms of transactions volume and value.3 2009 298. lost ground during 2009 to the benefit of its three rival operators MasterCard International Inc. This positioning is expected to play a negative role in the popularity of charge cards over the forecast period as the economic downturn will continue to have a negative effect on both businesses and private consumers who use charge cards as a short-term line of credit. accounting for 53% of charge cards in circulation. Customers buying airline tickets with Aer Lingus in the UK can now use their American Express cards to pay for the transaction. Competition to charge cards over the forecast period is expected to come mainly from credit cards as credit cards offer lower fees than charge cards and are easier to obtain. American Express.

400.5 2009 43.8 4. trade sources Table 36 Personal Charge Cards Category Performance: 2005-2010 2005 2006 39. trade associations.4 2009 2. company research. trade sources Table 33 '000 cards Charge Cards Category Performance: Number of Cards in Circulation 2005-2010 2005 Charge Card Function Source: 2006 4.1 -1.9 Euromonitor International from official statistics.957. trade press.632.6 3. trade associations.357.805.336. trade press.220.1 3.0 Euromonitor International from official statistics. trade interviews. trade press.8 33. trade associations.1 28.845. trade interviews.3 3.3 4.959.9 6.3 2005/10 TOTAL 21.3 2010 5.5 1.428.9 1.8 Euromonitor International from official statistics.Financial Cards and Payments United Kingdom (mn) Transaction value (£ mn) Source: 26.544. trade interviews.651.760.5 2008 2. company research.6 4. trade press. trade interviews.8 4.6 2009 5. trade associations. trade interviews. company research. trade sources Table 38 Personal Charge Cards Category Performance: % Growth 2005-2010  Euromonitor International Page 37 .6 Euromonitor International from official statistics. company research.0 1.2 2008 6.225.0 28.402.9 2010 42.366. company research. trade press.5 Number of transactions (mn) Transaction value (£ mn) Source: 34.3 2005/10 TOTAL 12.4 Euromonitor International from official statistics.609.4 2007 2.136.4 30. company research.398.2 33.321.120.846.031.2 2007 5.6 Euromonitor International from official statistics.0 -5.8 2007 44. trade associations.0 2010 2.0 2008 43. trade associations. trade sources Table 34 % growth Charge Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 4. trade interviews. trade press. trade sources Table 37 Personal Charge Cards Category Performance: Number of Cards in Circulation 20052010 '000 cards 2005 Personal Charge Cards Source: 2006 1.729. trade sources Table 35 % cards growth Charge Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Charge Card Function Source: 2005-10 CAGR 2.

trade sources Table 43 % cards growth Commercial Charge Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Commercial Charge Cards Source: 2005-10 CAGR -0. trade interviews.089.5 26. trade interviews. trade press.2 2009 3. company research.5 -8.1 11. trade associations.041.7 2008 3.1 2005/10 TOTAL 24. trade press.4 Euromonitor International from official statistics.9 Number of transactions (mn) Transaction value (£ mn) Source: 212.0 Euromonitor International from official statistics.390. company research.512.6 2009 255. company research. trade associations. trade sources Table 40 Commercial Charge Cards Category Performance: 2005-2010 2005 2006 229.1 2008 250.362. company research. company research.9 Euromonitor International from official statistics.0 Euromonitor International from official statistics.324.818.2 -1.4 2.9 23.0 24.5 5.8 Euromonitor International from official statistics. trade sources  Euromonitor International Page 38 .3 2010 258.Financial Cards and Payments United Kingdom % growth 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 4.9 1. trade interviews.845.1 2005/10 TOTAL 21. trade sources Table 39 % cards growth Personal Charge Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Personal Charge Cards Source: 2005-10 CAGR 7.091. trade associations. trade associations.9 3. company research.8 24.1 -1. trade press.2 Euromonitor International from official statistics. trade associations.3 2010 3. trade press.5 -1.236.9 28.394.7 2005/10 TOTAL 45.0 2007 234. trade interviews. trade press.553. trade press.8 2007 3.0 1.1 -2. trade interviews. trade associations. trade sources Table 41 Commercial Charge Cards Category Performance: Number of Cards in Circulation 20052010 '000 cards 2005 Commercial Charge Cards Source: 2006 3.9 2005/10 TOTAL -4. trade sources Table 42 % growth Commercial Charge Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 4.5 28. trade interviews.

Financial Cards and Payments

United Kingdom

Table 44 '000 cards Company

Charge Cards: Number of Cards by Issuer 2005-2009

2005 2,180.9 893.5 790.2 307.7 258.2 206.6 113.6 94.9 4,845.6

2006 2,249.4 900.7 783.2 331.9 260.3 208.2 113.6 109.9 4,957.2

2007 2,818.4 827.5 791.5 401.2 264.2 211.4 114.0 116.0 5,544.2

2008 3,399.8 820.4 770.8 450.6 287.1 218.7 146.9 126.3 6,220.6

2009 3,054.8 780.7 698.7 442.0 277.3 200.5 147.0 159.3 5,760.3

American Express Co Royal Bank of Scotland Group Barclays Group Plc Diners Club UK Ltd HSBC Bank Plc Bank of Scotland plc Citigroup Inc Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 45 '000 cards Company

Charge Cards: Number of Cards by Operator 2005-2009

2005 2,180.9 1,230.0 1,127.0 307.7 0.0 4,845.6

2006 2,249.4 1,242.0 1,134.0 331.9 0.0 4,957.2

2007 2,818.4 1,215.9 1,108.7 401.2 0.0 5,544.2

2008 3,399.8 1,320.4 1,079.3 421.2 0.0 6,220.6

2009 3,054.8 1,260.1 1,050.0 395.4 0.0 5,760.3

American Express Co MasterCard International Inc Visa Europe Diners Club UK Ltd Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 46 £ million Company

Charge Cards Payment Transaction Value by Issuer 2005-2009

2005 9,183.0 3,986.8 3,971.5 1,275.2 1,329.6 1,068.4 1,086.7 4,497.2 26,398.4

2006 11,324.6 4,359.9 4,302.4 1,544.5 1,472.9 1,203.3 1,215.5 4,802.8 30,225.8

2007 13,647.4 4,454.5 4,554.6 1,800.0 1,479.2 1,243.5 1,214.7 4,927.4 33,321.2

2008 14,920.3 3,883.1 3,904.2 1,812.0 1,458.6 1,343.6 991.8 5,086.4 33,400.0

2009 11,526.0 3,800.3 3,771.5 1,888.2 1,385.7 1,135.5 905.7 4,238.1 28,651.1

American Express Co Royal Bank of Scotland Group Barclays Group Plc Diners Club UK Ltd HSBC Bank Plc Citigroup Inc Bank of Scotland plc Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 47 £ million Company

Charge Cards Payment Transaction Value by Operator 2005-2009

2005 9,183.0 7,876.9 8,168.4

2006 11,324.6 8,602.3 8,842.8

2007 13,647.4 8,642.0 9,388.1

2008 14,920.3 8,268.0 8,503.2

2009 11,526.0 7,871.2 7,746.0

American Express Co Visa Europe MasterCard International Inc

 Euromonitor International

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39

Financial Cards and Payments

United Kingdom

Diners Club UK Ltd Others Total
Source:

1,170.2 26,398.4

1,456.2 0.0 30,225.8

1,643.7 0.0 33,321.2

1,708.6 0.0 33,400.0

1,507.9 0.0 28,651.1

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 48 '000 cards Company

Personal Charge Cards: Number of Cards by Issuer 2005-2009

2005 1,395.9 213.7 0.0 1,609.6

2006 1,402.1 230.3 0.0 1,632.4

2007 1,752.3 279.2 0.0 2,031.5

2008 2,117.5 284.9 2,402.4

2009 2,097.9 268.1 0.0 2,366.0

American Express Co Diners Club UK Ltd Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 49 '000 cards Company

Personal Charge Cards: Number of Cards by Operator 2005-2009

2005 1,395.9 213.7 0.0 1,609.6

2006 1,402.1 230.3 0.0 1,632.4

2007 1,752.3 279.2 0.0 2,031.5

2008 2,117.5 284.9 0.0 2,402.4

2009 2,097.9 268.2 0.0 2,366.0

American Express Co Diners Club UK Ltd Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 50 £ million Company

Personal Charge Cards Transaction Value by Issuer 2005-2009

2005 2,911.3 445.7 0.0 3,357.0

2006 3,586.8 550.0 0.0 4,136.8

2007 4,353.8 605.2 0.0 4,959.0

2008 4,324.3 522.1 0.0 4,846.5

2009 3,348.2 457.6 0.0 3,805.9

American Express Co Diners Club UK Ltd Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 51 £ million Company

Personal Charge Cards Transaction Value by Operator 2005-2009

2005 2,911.3 445.7 0.0 3,357.0

2006 3,586.8 550.0 0.0 4,136.8

2007 4,353.8 605.2 0.0 4,959.0

2008 4,324.3 522.1 0.0 4,846.5

2009 3,348.2 457.6 0.0 3,805.9

American Express Co Diners Club UK Ltd Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 52 '000 cards

Commercial Charge Cards: Number of Cards by Issuer 2005-2009

 Euromonitor International

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40

Financial Cards and Payments

United Kingdom

Company American Express Co Royal Bank of Scotland Group Barclays Group Plc HSBC Bank Plc Bank of Scotland plc Diners Club UK Ltd Citigroup Inc Others Total
Source:

2005 785.0 893.5 790.2 258.2 206.6 94.0 113.6 94.9 3,236.0

2006 847.2 900.7 783.2 260.3 208.3 101.5 113.6 109.9 3,324.8

2007 1,066.1 827.5 791.5 264.2 211.4 122.0 114.0 116.0 3,512.7

2008 1,282.2 820.4 770.8 287.1 218.7 165.7 146.9 126.3 3,818.2

2009 956.9 780.7 698.7 277.3 200.5 173.9 147.0 159.3 3,394.3

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 53 '000 cards Company

Commercial Charge Cards: Number of Cards by Operator 2005-2009

2005 1,230.0 1,127.0 785.0 94.0 0.0 3,236.0

2006 1,242.0 1,134.0 847.2 101.6 0.0 3,324.8

2007 1,215.9 1,108.7 1,066.1 122.0 0.0 3,512.7

2008 1,320.4 1,079.3 1,282.2 136.3 0.0 3,818.2

2009 1,260.1 1,050.0 956.9 127.3 0.0 3,394.3

MasterCard International Inc Visa Europe American Express Co Diners Club UK Ltd Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 54 £ million Company

Commercial Charge Cards Payment Transaction Value by Issuer 2005-2009

2005 6,271.6 3,986.8 3,971.5 829.5 1,329.6 1,068.4 1,086.7 4,497.2 23,041.4

2006 7,737.8 4,359.9 4,302.4 994.5 1,472.9 1,203.3 1,215.5 4,802.8 26,089.0

2007 9,293.5 4,454.5 4,554.6 1,194.8 1,479.2 1,243.5 1,214.7 4,927.4 28,362.1

2008 10,595.9 3,883.1 3,904.2 1,289.9 1,458.6 1,343.6 991.8 5,086.4 28,553.6

2009 8,177.8 3,800.3 3,771.5 1,430.5 1,385.7 1,135.5 905.7 4,238.1 24,845.3

American Express Co Royal Bank of Scotland Group Barclays Group Plc Diners Club UK Ltd HSBC Bank Plc Citigroup Inc Bank of Scotland plc Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 55 £ million Company

Commercial Charge Cards Payment Transaction Value by Operator 2005-2009

2005 6,271.6 7,876.9 8,168.4 724.5 0.0 23,041.4

2006 7,737.8 8,602.3 8,842.8 906.2 0.0 26,089.0

2007 9,293.5 8,642.0 9,388.1 1,038.6 0.0 28,362.1

2008 10,595.9 8,268.0 8,503.2 1,186.5 0.0 28,553.6

2009 8,177.8 7,871.3 7,746.0 1,050.3 0.0 24,845.3

American Express Co Visa Europe MasterCard International Inc Diners Club UK Ltd Others Total

 Euromonitor International

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41

Financial Cards and Payments

United Kingdom

Source:

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 56

Charge Cards Forecast Category Performance: 2010-2015 2010 2011 307.6 29,145.8 2012 317.0 30,859.9 2013 332.0 34,111.6 2014 344.5 36,772.2 2015 354.9 38,863.3

Number of transactions (mn) Transaction value (£ mn)
Source:

301.4 28,120.4

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 57

Charge Cards Forecast Category Performance: Number of Cards in Circulation 20102015

'000 cards 2010 Charge Card Function
Source:

2011 5,345.0

2012 5,374.3

2013 5,450.4

2014 5,534.9

2015 5,623.5

5,428.8

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 58 % growth

Charge Cards Forecast Category Performance: % Growth 2010-2015

2014/15 Number of transactions Transaction value
Source:

2010-15 CAGR 3.3 6.7

2010/15 TOTAL 17.7 38.2

3.0 5.7

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 59 % cards growth

Charge Cards in Circulation Forecast Category Performance: % Growth 2010-2015

2010-15 CAGR Charge Card Function
Source:

2010/15 TOTAL 3.6

0.7

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 60

Personal Charge Cards Forecast Category Performance: 2010-2015 2010 2011 43.2 3,680.5 2012 43.6 3,698.2 2013 44.9 3,820.8 2014 46.0 3,760.8 2015 46.6 3,667.9

Number of transactions (mn) Transaction value (£ mn)
Source:

42.6 3,729.5

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 61

Personal Charge Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015

 Euromonitor International

Page

42

7 2013 287.369. trade associations. trade interviews.9 Euromonitor International from official statistics.4 Number of transactions (mn) Transaction value (£ mn) Source: 258.8 2014 298.9 Euromonitor International from official statistics.3 2010/15 TOTAL 9.9 Euromonitor International from official statistics.179.0 2015 3. trade associations.Financial Cards and Payments United Kingdom '000 cards 2010 Personal Charge Cards Source: 2011 2.3 2012 273. trade press. company research. trade interviews. trade press. company research.290.044.3 25.3 3. trade interviews.432.5 -1.336.011.5 2012 3. trade sources Table 65 Commercial Charge Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 '000 cards 2010 Commercial Charge Cards Source: 2011 2.195.998. trade associations.3 6.5 33.102. company research.346.5 Euromonitor International from official statistics. trade sources Table 66 % growth Commercial Charge Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 3.6 7.5 2012 2. trade interviews.161. trade press.5 2013 2.6 Euromonitor International from official statistics. trade sources  Euromonitor International Page 43 . trade press. company research.1 44.091.4 27.0 2014 2.6 2.9 3.4 2015 308.443.6 0. trade interviews.406.6 2010/15 TOTAL 19.9 Euromonitor International from official statistics.8 -0.8 2013 3. trade associations. trade interviews. trade sources Table 62 % growth Personal Charge Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 1. company research.3 -2. trade associations. trade associations. trade sources Table 64 Commercial Charge Cards Forecast Category Performance: 2010-2015 2010 2011 264. trade sources Table 63 Personal Charge Cards in Circulation Forecast Category Performance: % Growth 20102015 % cards growth 2010-15 CAGR Personal Charge Cards Source: 2010/15 TOTAL 4.0 30.2 35.465.9 2015 2.390. trade press.004.7 1. company research.5 2014 3.8 24. trade press.

trade associations.8 0.Financial Cards and Payments United Kingdom Table 67 Commercial Charge Cards in Circulation Forecast Category Performance: % Growth 2010-2015 % cards growth 2010-15 CAGR Commercial Charge Cards Source: 2010/15 TOTAL 2. trade sources  Euromonitor International Page 44 .6 Euromonitor International from official statistics. trade press. company research. trade interviews.

Although this figure declined over the latter part of the review period. Commercial credit cards benefited from the easy access which companies had to credit cards until 2008. The possibility of obtaining a free credit card resulted in the number of credit cards per person in the UK standing at 0. rising in number at a CAGR of 6% CAGR.9 in 2010. but had a negative effect on credit cards.Financial Cards and Payments United Kingdom CREDIT CARDS IN THE UNITED KINGDOM CATEGORY ANALYSIS HEADLINES • • • • • Credit card transactions increases in value by 2% in 2010 to £110. credit card posts a positive performance in 2010 Average spend per credit transaction decreases by 2% in 2010 to £57 Royal Bank of Scotland Group leads credit cards in 2009 with a 14% value share Credit cards is set to increase in constant value at a CAGR of 2% over the forecast period while volume is set to rise at a CAGR of 4% TRENDS • The main function of credit cards for British consumers is to pay for retail purchases. This very low proportion is mainly due to the much • • • • • •  Euromonitor International Page 45 . Unlike in many other Western European countries. commercial credit cards experienced the highest growth. Nevertheless. The total number of credit cards in circulation fell by 4% to 56 million. However.9% APR for purchases.1 billion. transactions value increased. However. transaction volume increases by 4% to 1. meaning that spend per card increased by 7% in 2010. a credit card is seen as a way of obtaining access to quick and easy credit. as already mentioned.7% APR for cash withdrawals. consumer banking in the UK is provided almost entirely free of charge and consumers do not have to pay annual fees for the majority of their cards. a trend which was a constant over the review period. The economic downturn helped to boost the performance of debit cards. many consumers discovered that they were unable to repay their monthly credit card bills as the levels of nonperforming card lending increased to almost 5% in 2010. many Britons opted to move away from credit cards towards debit cards in 2010 as a way of avoiding the risk of falling into more debt. The partial recovery of the British economy meant many of those who had previously decided to keep their credit cards decided to use them more often. offer this payment option.9 billion As the recession ends. The higher rates charged for those withdrawing money from cash machines using credit cards means that the majority of British consumers rarely use this option unless it is absolutely necessary. As Britons are increasingly using their cards for micropayments. spend per transaction fell by 2% to £57. During the review period. together with the number of transactions per card. commercial credit cards accounted for only a marginal share of all credit cards issued in the UK.9 and 19. This has had the effect of boosting the popularity of using credit cards for micropayments and has helped bring down the average spend per transaction by more than £8 since 2007. while in many continental Europe countries the minimum spend is €6. over the review period. Card issuers such as high street bank HSBC charge between 16.9% and 24. British consumers have the opportunity to use their credit cards within a wide range of retail outlets as even small merchants. it remains the second highest in Western Europe. particularly independent small grocers. which saw an 8% increase. Although the strategy of cutting down on the number of credit cards proved beneficial for some. Many retailers require a minimum spend of just £1 for customers to be able to use their financial cards for payment. British consumers continued cancelling their credit cards. rising to 23. For many Britons. In 2010.

as happens with the majority of credit cards. Similar terms were offered through the Saga credit card launched by Allied Irish Banks Plc. MasterCard’s main competitor in the UK. as many small companies and self-employed entrepreneurs use personal credit cards for business purposes. Advent International and Bain Capital. It runs exclusive offers and also gives cardholders the opportunity to obtain popular Tesco Clubcard loyalty points when using the card for purchases. This resulted in a profit for RBS of £900m. In second position was Barclays Group Plc with a value share of 13%. In 2010. whichever is higher. many issuers focused on marketing credit cards which offer good value for money when used abroad. American Express was very active in promoting the benefits of its Platinum Cashback Credit Card during 2010. cash withdrawals are subject to a charge even if the full balance is paid promptly at the end of the month. the main condition on the Platinum Cashback Credit Card is that the minimum payment has to be received by the due date and. MasterCard accounted for 55% of total value spent on credit cards in the UK during 2009 and 62% of credit cards in circulation. COMPETITIVE LANDSCAPE • Royal Bank of Scotland Group (RBS) led credit cards in the UK in 2009. accounting for 14% of total value sales. are two private equity investors and were prepared to pay up to £2billion. has partnered with MasterCard for its co-branded credit card. up to £100 cashback during the first three months and as much as 1. Nevertheless. For example. it is interesting to note that retailers such as Marks & Spencer and Tesco issue their own credit cards. The company claimed to be a leader in credit cards by offering a cashback rate of 5% on items purchased with the card. The buyers. However. unlike with more mainstream cards. Royal Bank of Scotland (RBS) announced the sale of its credit card payment processing business. For example. increasing its share in both volume of cards and value spent. Saga holders who pay their bill in full at the end of the month incur no interest on cash withdrawals abroad. while Barclays held a 17% volume share. Visa. The line dividing personal and commercial credit cards is somewhat blurred. Another important factor in MasterCard’s success in credit cards during the review period was the changes which took place in partnerships within issuers. part of Lloyds TSB Group Plc. The bank is 84% owned by the British government and this sale was seen as the first move towards recovering the taxpayer investment required to bail out the bank at the height of the global economic crisis. Although the main players in credit cards in the UK continue to be high street banks. During August 2010. • • • • • • PROSPECTS  Euromonitor International Page 46 . the Clarity card is one of the cheapest ways to obtain cash when travelling abroad. the Platinum Cashback Credit Card has a minimum payment of 10% of the total amount owing or £50. Nevertheless. Capital One has started offering cards with MasterCard in addition to the Capital One Classic which it offers through Visa. lost ground to MasterCard over the review period. thanks to its lower than average interest rate of 12. also offers no charges on withdrawals or conversion with its Zero credit card.9% APR. although a 2% withdrawal fee is charged. Tesco. with retailers such as John Lewis and Marks & Spencer opting for MasterCard as the operator of their co-branded cards. In order to lure consumers to their credit cards. which changed its name from Abbey National plc in early 2010. RBS issued credit cards accounted for 13% of the total number of credit cards in circulation in the UK during 2009. however. Much of MasterCard’s success can be attributed to the growth in so-called ‘affinity cards’. commercial credit card transaction value increased by 2% in current value terms as the British economy experienced a recovery.Financial Cards and Payments United Kingdom greater popularity of commercial charge cards within the British business community.25% afterwards and no upper limit on how much cash the cardholder can withdraw. Santander UK plc. MasterCard reinforced its leadership in 2009. This card does not impose a fee for cash withdrawals at overseas ATMs either. for example. These banks combined account for more than a quarter of total value spent on credit cards in the UK during 2009 and also led in terms of the number of cards in circulation. Halifax. offers the possibility of withdrawing cash worldwide without a conversion charge through its Clarity credit card. Within credit card operators. both in Tesco stores and elsewhere. Co-branded cards have proven especially successful.

trade interviews. With the financial problems British banks faced in 2008 and 2009. trade sources Table 69 '000 cards Credit Cards Category Performance: Number of Cards in Circulation 2005-2010 2005 Credit Function Source: 2006 69.231. trade press.669.5 113.6 2005/10 TOTAL 15. increasing at a CAGR of 2%.6 2. trade interviews.9 3.563.5 2010 1. trade press. trade associations.5 Euromonitor International from official statistics.1 2008 66.810. trade sources Table 70 % growth Credit Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 2.963. Access to credit cards in the UK is likely to become more restricted.101. while transactions volume is expected to increase at a CAGR of 4%. trade press.762. A slight decline is expected in the volume of cards in circulation.014. trade interviews. company research. and not only for risky applicants. Card issuers. trade interviews. credit cards in the UK is expected to post a better performance than over the review period.894.8 2007 67. • • CATEGORY DATA Table 68 Credit Cards Category Performance: 2005-2010 2005 Number of transactions (mn) Transaction value (£ mn) Source: 2006 1.927.937. trade associations.4 107.733.4 Euromonitor International from official statistics.4 2008 1. trade associations. Slightly negative CAGR growth is expected to remain in the number of cards in circulation.437.9 0. Credit limits are also expected to decrease. many of them need to raise funds. Constant value sales are expected to perform positively over the forecast period.7 2009 1. company research.7 2010 55.303. banks will reduce the amount of money Britons are able to access with their credit cards both on purchases and cash withdrawals. trade associations. company research.675. will remain reluctant to encourage a mass credit card spending spree such as the one seen during the early stages of the review period. trade sources  Euromonitor International Page 47 .3 69. trade sources Table 71 % cards growth Credit Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Credit Function Source: 2005-10 CAGR -4.3 1.947. with credit checks much tougher on new applicants. trade press.2 106.8 2.681. mainly high street banks.0 2009 58.4 2005/10 TOTAL -20.866.1 Euromonitor International from official statistics. and one the options is following the continental model of charging fees merely for the privilege of holding a credit card.2 104.2 Euromonitor International from official statistics.2 2007 1. company research.2 109.3 110. Furthermore. in order to reduce risk. Another factor likely to impact upon credit cards in the UK during the forecast period will be the possible introduction of set fees for cardholders.Financial Cards and Payments United Kingdom • Over the forecast period.1 -4.

2 Euromonitor International from official statistics. trade sources Table 77 Commercial Credit Cards Category Performance: Number of Cards in Circulation 20052010 '000 cards 2005 2006 2007 2008 2009 2010  Euromonitor International Page 48 .3 Euromonitor International from official statistics.9 919.261.4 2009 10.1 Euromonitor International from official statistics.661.8 895.7 Number of transactions (mn) Transaction value (£ mn) Source: 1.5 106. trade interviews.927.781.271. trade press. trade associations.838.2 702.9 0.8 2010 10. trade press. trade associations. trade associations.2 -4.1 2007 8.8 2010 55. trade interviews.4 2005/10 TOTAL -20.3 2008 9.800. company research.0 851.1 2007 1.644. company research.314.668.5 2007 67.6 112.9 104.098.672.8 2. trade sources Table 74 % growth Personal Credit Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 2.230.3 2009 1.7 3. trade press.6 Number of transactions (mn) Transaction value (£ mn) Source: 6.797.0 2009 58.3 108.2 109. trade press. company research.1 2008 1.5 2. trade interviews. trade associations.699. trade sources Table 76 Commercial Credit Cards Category Performance: 2005-2010 2005 2006 7.856.034. trade interviews.9 Euromonitor International from official statistics. trade sources Table 73 '000 cards Personal Credit Cards Category Performance: Number of Cards in Circulation 2005-2010 2005 Personal Credit Cards Source: 2006 69.7 2008 65. trade sources Table 75 % cards growth Personal Credit Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Personal Credit Cards Source: 2005-10 CAGR -4.910.5 2005/10 TOTAL 15. company research.7 2010 1. trade press.6 Euromonitor International from official statistics. trade associations. company research.8 632.1 870.3 69. trade interviews.4 106.Financial Cards and Payments United Kingdom Table 72 Personal Credit Cards Category Performance: 2005-2010 2005 2006 1.

2 Euromonitor International from official statistics.8 942.092.672.014.8 3.205.4 217.6 6.0 2.4 5.5 2.051.2 934.786.1 6.1 2.4 3. The Clydesdale Bank Plc J Sainsbury Plc American Express Co Others Total Source: Euromonitor International from official statistics.480.6 2.2 4.011.3 196.101.830.4 861.6 2005/10 TOTAL 49.350.630.4 6. company research.5 9.0 3. trade press.2 5. company research.0 9.8 3.7 6.253.7 6.158.8 1.103.796. trade associations.6 1.428. company research.1 2008 10.4 2006 12.9 2.830.927.0 49.486.0 4.600.137.612.3 6.0 1.509.123.2 6. company research.5 9.413.303.0 1.4 1.7 1.584.0 66.472.4 69.6 2.3 5.7 1.3 1.7 99.9 37.1 3. trade associations.4 961.6 1.694.8 2007 11.2 881.9 5. trade interviews.459.2 2.7 1.8 3.Financial Cards and Payments United Kingdom Commercial Credit Cards Source: 146.6 3. trade sources Table 78 % growth Commercial Credit Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 8.672.297.669.5 957. trade sources Table 80 '000 cards Company Credit Cards: Number of Cards by Issuer 2005-2009 2005 12.231.4 2.3 67.427.758.9 6.0 195.0 2.963.0 205. trade press.624.269.962.6 1.161.9 2005/10 TOTAL 33.2 57.9 925.5 1. trade press.026.1 6.9 867.0 Euromonitor International from official statistics.5 -4.6 1.2 1.750.188.527.1 9.9 80.060.951.7 967.060.4 1.1 166.367.211.906.7 3.074.552.7 2.459. trade interviews.4 2.529.046.871.8 1.297. trade sources Table 79 % cards growth Commercial Credit Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Commercial Credit Cards Source: 2005-10 CAGR 5.001.554.9 7.9 Euromonitor International from official statistics.017.958.4 6.7 69.0 3.8 1.437. trade associations.589.882.2 1.3 968.964.513.268.933.5 2. trade interviews.104.0 2.7 Barclays Group Plc Royal Bank of Scotland Group HSBC Bank Plc MBNA America Bank NA (MBNA) Lloyds TSB Group Plc Bank of Scotland plc Capital One Bank (Europe) Plc Marks & Spencer Financial Services Plc Tesco Personal Finance Plc Abbey National Plc Citigroup Inc Nationwide Building Society First Direct Co-operative Bank.9 5.177. trade sources Table 81 '000 cards Credit Cards: Number of Cards by Operator 2005-2009  Euromonitor International Page 49 . trade press.2 117.4 6.856.527.8 2.0 2009 9.9 982.110.5 5.201.4 2.7 6.364.6 2.6 1.8 5.2 58. trade associations.2 1. trade interviews.8 6.169.497.

826.466.733.7 967.4 109.0 3.0 104.551.027.877.4 10.762. trade press.3 5.200.277.7 41.5 2.6 8.4 2.2 9.986.041.209.219.100.2 2.191.566.0 185.9 3. trade press.4 5.5 10.7 2.216.7 185.252.437.5 10.7 328.296.0 69.1 2008 39.4 2006 31.527.276.9 1.8 7.927.959. trade associations.650.0 107.7 4.5 7.379.563.0 8.518.3 22.005.0 2009 36.1 13.6 2.8 1.5 8.1 9.6 2.571.286.927.1 2.303.947.2 0.2 681.8 0.1 9.8 0.5 0.034.824.2 2007 56.662.640.4 31.152.0 106.508.0 69.746.067.698.3 8.7 Euromonitor International from official statistics.4 2008 61.136.8 2.517.8 11.119.621.706.510.9 2.6 9.467.0 113.502.5 9.5 2006 46.403.947.380. trade press.4 9. trade associations.733.656.3 7.111.8 58.9 65.4 0.0 4.8 12.052.1 0. The American Express Co Others Total Source: Euromonitor International from official statistics.0 11.036. company research.264.3 471.0 66.450.119.616.6 80.076.726.2 1.8 26.030.5 2.963.3 3.7 1.668.825.604.9 2.5 0.766.025.0 117.0 58.2 2.115.4 48.275.5 Royal Bank of Scotland Group Barclays Group Plc HSBC Bank Plc MBNA America Bank NA (MBNA) Lloyds TSB Group Plc Bank of Scotland plc Tesco Personal Finance Plc Capital One Bank (Europe) Plc Marks & Spencer Financial Services Plc Citigroup Inc Abbey National Plc First Direct Clydesdale Bank Plc Nationwide Building Society J Sainsbury Plc Co-operative Bank.014.0 99.640.5 2.201.3 4.202.9 456.9 2.0 660.725.6 0.980.4 2008 15.286.591.9 57.918.8 2007 35.5 107.6 51.6 505.032.6 7. trade sources Table 84 '000 cards Personal Credit Cards: Number of Cards by Issuer 2005-2009  Euromonitor International Page 50 .9 106.138.6 328.711.6 0.5 12.674.3 4.985.7 10.3 471.963.9 10.5 4. trade sources Table 83 £ million Company Credit Cards Payment Transaction Value by Operator 2005-2009 2005 41.4 1.7 2009 14.2 53.7 5.729. company research.1 1.476.1 104.504.0 10.5 456.442. trade associations.6 9.7 2009 58.142.845.9 252.8 113.5 14.2 0.0 67.8 7.2 2007 16.Financial Cards and Payments United Kingdom Company MasterCard International Inc Visa Europe American Express Co Others Total Source: 2005 28.421.272.5 MasterCard International Inc Visa Europe American Express Co Others Total Source: Euromonitor International from official statistics.049.3 9.385. trade sources Table 82 £ million Company Credit Cards Payment Transaction Value by Issuer 2005-2009 2005 19. trade interviews.296. company research. trade interviews. trade interviews.1 252.5 2006 19.6 5.154.652.563.5 5.0 109.5 6.2 1.4 1.1 37.4 6.3 7.3 49.231.786.162.361.858.0 2.4 2.253.797.762.1 8.231.002.945.1 11.725.0 1.5 2.5 3.5 4.127.3 6.

7 2.0 4.9 79.9 6.731.060.8 Euromonitor International from official statistics.2 2.2 6.134.3 2006 18.952.1 9. company research.797.7 1.9 867.4 10.4 12.3 6.9 1.6 1.342.657.2 2.4 3.3 9.0 Royal Bank of Scotland Group Barclays Group Plc HSBC Bank Plc MBNA America Bank NA (MBNA) Lloyds TSB Group Plc Bank of Scotland plc Tesco Personal Finance Plc Capital One Bank (Europe) Plc Marks & Spencer  Euromonitor International Page 51 . company research.158.7 98.508.6 1.6 2.5 3.964.7 2008 39.444.3 7.260.2 5.571.9 5.0 31.0 41.6 6.5 2007 35.5 3.3 2006 31.5 1.951.9 0.763. The Clydesdale Bank Plc J Sainsbury Plc American Express Co Others Total Source: 2005 12.597.0 9.454.6 5.346.890.448.3 2.5 65.9 5.142.Financial Cards and Payments United Kingdom Company Barclays Group Plc Royal Bank of Scotland Group MBNA America Bank NA (MBNA) HSBC Bank Plc Lloyds TSB Group Plc Bank of Scotland plc Capital One Bank (Europe) Plc Marks & Spencer Financial Services Plc Tesco Personal Finance Plc Abbey National Plc Citigroup Inc Nationwide Building Society First Direct Co-operative Bank.9 9.539.2 116.1 5.9 9.0 3.025.818.001.7 1.2 57.743.1 1.297.5 3.9 58.642.586.240.461.136.9 5.046.5 6.003.2 8.142.0 58.4 954.4 861.9 2.643.039.936.3 0.2 116.6 2.3 5.904.216.777.2 4.389.183.2 11.7 2009 14.2 881.2 7.0 67.201.1 6.9 7.9 4.915.757.386.5 1.6 26. trade sources Table 86 £ million Company Personal Credit Cards Payment Transaction Value by Issuer 2005-2009 2005 19.1 2.7 3.0 2.3 10.7 2008 10.4 5.058.205.674.6 6.4 1.467.916.0 2009 9.823.147.7 961.4 10.098.0 79.0 69.064.7 0. trade associations.161.9 11.592.781.2 1.080.0 49.8 934.103.040.2 5.4 5.3 2006 12.7 0.734.1 6.828.9 982.427.0 57.034.6 8.9 10. trade associations.0 10.0 65.685.480.8 MasterCard International Inc Visa Europe American Express Co Others Total Source: Euromonitor International from official statistics.0 10.0 9.293.4 2.459.4 7.944.5 957.092.8 8.265.7 98.7 22.0 69.3 6. trade press.2 6.565.098.939.2 1.280.101.4 4.543.051. trade press.4 8.8 69.0 37.719.3 1.363.9 934.956.0 9.504.041.5 2.253.0 49.686.0 3.1 1.608.026.8 1.2 6.565.992.8 1.862.539.098.621.981.5 0.7 3.352.229.098.594.5 2007 11.9 3.982.713.3 5.095.124.034.3 3.907.752.136. trade sources Table 85 '000 cards Company Personal Credit Cards: Number of Cards by Operator 2005-2009 2005 28.202.8 6.7 5.803.155.6 69.781.860.3 968.491.7 1. trade interviews.4 1.9 9.1 4.6 6.907.0 2.500.3 5.4 1.103.6 9.650.1 9.363.590.0 2009 35.3 2008 15.1 67.171.652.243.271. trade interviews.888.0 1.9 14.7 4.533.693.7 8.233.9 919.413.483.5 2.9 1.4 2.873.9 2007 15.510.3 9.608.7 7.2 6.420.9 13.107.271.969.797.046.

5 217.6 6.5 2.314.7 104. trade associations.7 MasterCard International Inc Visa Europe American Express Co Others Total Source: Euromonitor International from official statistics.3 2007 29. trade associations.360.466.1 9.6 2.838.5 6.9 51.9 11.9 2.3 184.9 0.6 2.0 106.314.055.5 2.1 18.5 17.228.933.3 5.0 0.7 Euromonitor International from official statistics.899.5 8. company research.9 57.5 0.2 16.0 106.8 2.9 1.7 2.2 656.6  Euromonitor International Page 52 .2 4.152.711.2 5.1 26.387.1 24.4 2008 32.1 2006 25.6 0.5 18.4 1.2 108.8 1.5 2. trade sources Table 87 £ million Company Personal Credit Cards Payment Transaction Value by Operator 2005-2009 2005 41.1 16.644. trade press.9 52.1 18.154.4 16.3 2009 58.3 3.7 27.0 323. trade press.0 3.0 112.640. The American Express Co Others Total Source: 3.8 249.965.0 4.0 184.2 2009 110. trade interviews.4 2.8 2.420.2 205.9 6.0 0.0 1.0 619.9 19.9 0.1 4.8 450.167.1 2.6 2006 46.996.7 1.6 9.2 2.0 106.0 104.0 2009 30.7 24.2 9.9 146.918.621.1 1.361.8 25.7 112.5 14.296.380.4 1.5 24.3 7.8 64.9 26.2 12.3 8.1 2007 99.1 25.910.910.6 7.5 10.421.6 18.0 2.100.1 2008 60.5 106.5 12.9 166.5 0.5 2.6 3.9 16.701.9 48.6 10.644.668. trade interviews.790. trade associations.6 3.6 2.7 0. trade sources Table 88 '000 cards Company Commercial Credit Cards: Number of Cards by Issuer 2005-2009 2005 23.680.3 6.3 249.0 16.4 30.Financial Cards and Payments United Kingdom Financial Services Plc Citigroup Inc Abbey National Plc First Direct Clydesdale Bank Plc Nationwide Building Society J Sainsbury Plc Co-operative Bank.2 196.216.6 468.858.010.6 9.7 2006 79.2 1.002.2 1.9 2.497.1 9.1 2007 55.6 6.5 7.5 450.7 3.746.545.261.261. trade press.548.5 7.8 465.1 4.0 108.196.1 21.6 16.0 465.616.4 0.0 Barclays Group Plc Royal Bank of Scotland Group HSBC Bank Plc Lloyds TSB Group Plc Bank of Scotland plc MBNA America Bank NA (MBNA) Capital One Bank (Europe) Plc Abbey National Plc Citigroup Inc Co-operative Bank. The Tesco Personal Finance Plc American Express Co Others Total Source: Euromonitor International from official statistics. company research.7 931.9 20.7 20.231.076. trade interviews.985.838.7 15. trade sources Table 89 '000 cards Company MasterCard Commercial Credit Cards: Number of Cards by Operator 2005-2009 2005 65.255.272.1 4.219.390.9 22. company research.4 2008 113.9 0.1 18.339.162.8 323.1 12.7 11.8 12.8 2.466.

1 94.3 2008 138.0 632.776.4 37.3 21.4 Number of transactions (mn) Transaction value (£ mn) Source: 1.1 70. trade associations.3 0.0 919.132.1 5.3 67.3 15.3 2008 607. company research. trade associations.0 205.9 2006 120.9 5.1 0.4 70.0 196.339.0 Euromonitor International from official statistics.4 96.4 103.024.1 0.5 276. trade sources Table 91 £ million Company Commercial Credit Cards Payment Transaction Value by Operator 2005-2009 2005 386.1 87.1 58.9 0.1 32.5 25.1 115.409.6 0.3 96.0 75.8 2.3 110. trade interviews.2 82.3 0.1 245.6 40.7 305.4 76.9 2006 438.228.4 0.4 2009 121. The Capital One Bank (Europe) Plc Citigroup Inc Abbey National Plc American Express Co Others Total Source: Euromonitor International from official statistics.301.150. trade associations.0 217.3 26.7 23.4 5.937. trade press.4 0.2 87.3 Euromonitor International from official statistics.5 2015 2.4 100.3 632.0 919.1 2007 578.4 80. company research. trade interviews.6 2012 2.6 35.2 36.8 9.6 115.9 80.0 146.9 260.7 41.2 31.9 176.3 87.8 20.0 148.3 117. trade sources Table 90 £ million Company Commercial Credit Cards Payment Transaction Value by Issuer 2005-2009 2005 120. trade sources Table 92 Credit Cards Forecast Category Performance: 2010-2015 2010 2011 2.9 68.0 69.1 18.1 58.0 702.9 11.1 144.8 Barclays Group Plc Royal Bank of Scotland Group MBNA America Bank NA (MBNA) Lloyds TSB Group Plc HSBC Bank Plc Bank of Scotland plc Tesco Personal Finance Plc Co-operative Bank.8 0.101.0 37.7 1.5 0. company research.0 895.0 28.1 0.1 25. trade associations.7 1.1 2007 143.0 166.2 83.8 112.4 2009 569.7 112. trade interviews.0 0. trade press. trade press.0 122.4 311.5 121.7 6.4 702.5 70. trade press.9 2014 2.8 MasterCard International Inc Visa Europe American Express Co Others Total Source: Euromonitor International from official statistics.8 33.1 86.0 24.906.7 6.0 93.9 35.9 15.0 2013 2.371.7 5.2 62.5 851.3 0.8 2.4 41.Financial Cards and Payments United Kingdom International Inc Visa Europe American Express Co Others Total Source: 80.6 0. trade interviews.6 104. trade sources Table 93 Credit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015  Euromonitor International Page 53 .0 851.1 30. company research.2 70.8 76.9 63.9 0.2 895.

company research. trade press.8 2. trade sources Table 94 % growth Credit Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 3. company research.6 0.182.2 1.699.257.7 11.326. trade associations.7 121.7 11.3 Euromonitor International from official statistics.Financial Cards and Payments United Kingdom '000 cards 2010 Credit Function Source: 2011 54.423.126. trade interviews.3 111.894.121. trade interviews.9 Euromonitor International from official statistics. trade press. trade sources Table 95 % cards growth Credit Cards in Circulation Forecast Category Performance: % Growth 2010-2015 2010-15 CAGR Credit Function Source: 2010/15 TOTAL -0.1 Euromonitor International from official statistics. company research.1 2010/15 TOTAL 20.714.458.8 114.289.5 2015 2.1 2010/15 TOTAL 20.1 2015 55. trade interviews.7 2013 2.0 2013 53.014.837.2 1.9 116.8 2012 2. trade associations.3 2014 54. trade associations.233.518.927.3 Euromonitor International from official statistics. trade sources  Euromonitor International Page 54 . company research.2 109.6 120.6 0.8 2013 53.9 2015 55. trade sources Table 98 % growth Personal Credit Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 3.230. trade press.0 55.9 Euromonitor International from official statistics. company research.994.216. trade press. trade associations. trade interviews.3 -0.311. trade press. trade associations.6 2012 53.122. trade interviews.9 2012 52.8 2.7 2014 2. trade associations. trade press.942. trade sources Table 97 Personal Credit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 '000 cards 2010 Personal Credit Cards Source: 2011 53. company research.7 Euromonitor International from official statistics. trade interviews.2 2014 54.0 Number of transactions (mn) Transaction value (£ mn) Source: 1. trade sources Table 96 Personal Credit Cards Forecast Category Performance: 2010-2015 2010 2011 2.982.5 55.419.

9 1.Financial Cards and Payments United Kingdom Table 99 Personal Credit Cards in Circulation Forecast Category Performance: % Growth 20102015 % cards growth 2010-15 CAGR Personal Credit Cards Source: 2010/15 TOTAL -0.8 2012 10.8 2010/15 TOTAL 20.4 892. trade associations.8 2015 195.0 2015 12.7 2012 184.3 -0. trade interviews. trade sources Table 100 Commercial Credit Cards Forecast Category Performance: 2010-2015 2010 2011 10.1 870. trade associations. trade interviews. trade press. trade sources Table 101 Commercial Credit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 '000 cards 2010 Commercial Credit Cards Source: 2011 187.3 3.9 2013 186. company research.6 Euromonitor International from official statistics. trade associations. trade press.1 2014 189. trade press.3 Euromonitor International from official statistics.3 Number of transactions (mn) Transaction value (£ mn) Source: 10.9 9.1 Euromonitor International from official statistics.9 948. trade associations. company research.3 0. trade sources  Euromonitor International Page 55 . trade interviews.0 Euromonitor International from official statistics.2 2013 11.3 951. trade press. company research. trade press.2 2014 11. trade interviews.1 Euromonitor International from official statistics. trade sources Table 102 % growth Commercial Credit Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 3. company research. trade sources Table 103 Commercial Credit Cards in Circulation Forecast Category Performance: % Growth 2010-2015 % cards growth 2010-15 CAGR Commercial Credit Cards Source: 2010/15 TOTAL 0. trade associations.4 939. trade interviews. company research.8 923.5 195.5 0.

value and cards in circulation as British consumers move from credit to debit cards Average debit cards transaction value increases by 2% to £46 in 2010 Lloyds TSB Group Plc remains the leading debit card issuer in 2010 with a volume share of 18% Debit transactions is set to increase in constant value at a CAGR of 7% over the forecast period to £411. These transactions are typically for lower amounts than purchases of household goods and services. typically supermarkets or hypermarkets. The average value of debit transactions increased by 2% in 2010. This was mainly due to British consumers becoming more reliant on debit cards as they abandoned their credit cards in an attempt to control spending during the economic downturn.8 billion in 2015 while volume is set to rise at a CAGR of 4% to 7. and the total value of the transaction is then charged directly to their current accounts. the value of debit cards transactions overtook the equivalent figure in cash in the UK during 2010. At the same time. British consumers have the opportunity to use their debit cards within a wide range of retail outlets as even small merchants and small grocery retailers offer this payment option. while in many continental European countries the minimum spend is €6. British consumers use their debit cards both for making purchases and withdrawing money from cash machines. Another common way of obtaining cash in the UK is requesting cash-back when making a payment at a retail outlet.9 billion TRENDS • For the first time ever. British consumers are charged for the amount of their shopping and the cash they want to receive from the cashier. Unlike many other Western European countries.4 billion Positive growth is recorded in debit volume. beverages and tobacco sales gaining almost a percentage point in share from 2009 to account for 22% of debit transactions in 2010. The possibility of having a free card linked to their current accounts has steadily increased the number of debit cards per • • • • •  Euromonitor International Page 56 . which lost share during 2010. Many Britons believe that it is easier to track their spending if they can see transactions on their bank statements. Debit cards also offer a better way of controlling expenditure than using the non-revolving credit of their credit cards as debit card transactions result in funds being debited directly from their current accounts. an increase of 10%.0 billion while volume increases by 8% to 6. The positive growth in both debit transactions volume and value as well as the increase registered in the number of debit cards in circulation in the UK during 2010 are all clear indicators that British consumers want greater control of their domestic finances. this is becoming very popular as the most convenient way of obtaining cash in British society. cash transactions value declined by 5% to £252 billion. spend of only £1 in order for customers to be able to take advantage of the debit card payment.Financial Cards and Payments United Kingdom DEBIT CARDS IN THE UNITED KINGDOM CATEGORY ANALYSIS HEADLINES • • • • • Debit transactions increases in value by 10% in 2010 to £291. Many retailers require a minimum. This has had the effect of stimulating micropayments and has helped to bring down the average expenditure per debit transaction by more than £3 since 2007. As British consumers decided to move from credit to debit cards in an attempt to maintain a higher degree of control over their finances. With most major retailers offering up to £50 in cash back per transaction. the value of debit transactions reached £291 billion in 2010. These increases were all related to the migration away from credit cards towards to debit cards as well as consumers reducing their cash payments. This trend was reflected in debit card expenditure by product area. the majority of consumer banking services in the UK remain free of charge and consumers do not have to pay annual fees to use their debit cards. with food.

is expected to increase to around 1. offers the possibility of withdrawing cash in Europe without conversion charges and a charge of just 1% if the currency is obtained elsewhere. Abbey managed to maintain a 6% in both transactions value and number of cards in circulation in 2009. which was 1. unemployment is not expected to fall in 2011. These five banks together accounted for 74% of total debit cards in circulation in the UK during 2009. which is linked to its current account. Ownership of debit cards in the UK. Thanks to its partnership with Verisoft. For example. the first bank to enter the British high street in 100 years. Four other banks—Royal Bank of Scotland Group. The number of debit cards in circulation is expected to rise to 104 million by 2015. The country closed 2010 with negative GDP growth recorded during the final quarter and the prospects for 2011 remain uncertain. Nevertheless. a figure which stood at 1. which initiated its operations in the UK in July 2010. and therefore there is little direct competition for cardholders. Metro Bank Plc. This card does not have a fee for cash withdrawals at overseas ATMs either.Financial Cards and Payments United Kingdom person in the UK. All indicators suggest that debit cards is likely to see positive growth over the forecast period. debit cards will likely outperform credit cards over the forecast period. Lloyds TSB benefits both from its extensive network of branches throughout the UK and its long established presence in the UK. The company steadily increased its volume share over the review period as many banks. Since it was acquired by Spain-based Banco Santander in 2004. • • • • • • PROSPECTS • The UK is likely to see a slow recovery from the financial crisis. Similarly attractive conditions were offered by Metro Bank.63 per capita by 2015. is free from conversion charges and no fees for levied for withdrawals from ATMs overseas. even more so as building societies lost ground over the review period.9 billion in 2015 while transactions is set to rise in current value at a CAGR of 7% to £411. The volume of debit card transactions is expected to rise at a CAGR of 4% to reach 7.8 billion. At the same time. one of the highest rates in Western Europe. following the witnessed during the latter years of the review period. the customers can leave the branch—or the ‘store’ as the bank prefers to refer to its branches—with a new card and PIN. In order to lure consumers to their debit cards. Issuers focus on offering benefits such as attractively low fees for banking and a wide network of ATMs. Visa continues to be the largest operator of debit cards in the UK in 2010 with a 67% volume share of debit cards. reflecting the high level of concentration in consumer banking in the UK. Ongoing uncertainty surrounding the employment situation will hinder the performance of debit cards during the early stages of the forecast period as consumers reduce spending on non-essential items. By offered to its customers benefits linked to its current account such as better conditions for mortgages owners the bank managed to retain its position within this very competitive environment. such as HSBC.35 per capita in 2010. many British issuers focused on offering cards which offer good value-for-money when used abroad. among other services. Its debit card. Lloyds TSB Group Plc retained its leading position in 2009. a one percentage point decrease from 2008. rather the competition exists in terms of account holders. started its operations by launching. through its Flex Account. Debit cards tend to be offered as a standard element of a bank account in the UK. switched their alliance from MasterCard to Visa. Barclays Group Plc HBOS Group an HSBC Bank Plc— managed to surpass the 10% threshold for the proportion of debit cards issued in the UK. accounting for 18% of total debit cards issued. the bank has worked hard to improve its presence on the British high street and has managed to increase its volume share in the very concentrated competitive environment in debit cards in the UK. debit cards ‘on the spot’. Nationwide. COMPETITIVE LANDSCAPE • Debit cards in the UK is dominated by retail banks. •  Euromonitor International Page 57 .35 per capita in 2010. albeit at slower pace than during the review period.

trade press.0 2010 6.0 2007 71. trade sources  Euromonitor International Page 58 . Debit cards transactions are also expected to be affected by the increasing use of credit cards as an internet payment method as consumers often feel that the latter represents a safer option. trade associations.348.354.771.178.0 2007 4.570.0 Euromonitor International from official statistics.9 2010 83. Any reduction in fees would have a positive effect on the number of POS terminals in use in the UK and would likely lead to an increase in cashless transactions made with debit cards.0 2008 76.871.313.9 176. The British banking system began its migration to the EMV standard earlier than other European countries.1 64.480. trade sources Table 106 % growth Debit Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 8. a bank-to-bank fee collectively fixed by Visa Europe's member banks for card payments which is ultimately paid by consumers. Nationwide announced that from November 2010 its very competitive Flex Account debit card would charge 2% for conversion on foreign currency when used abroad and also a £1 fee when using ATMs outside the UK. company research. Visa Europe proposed to cut its multilateral interchange fees (MIFs). Therefore.991. options such as setting a maximum amount to be spent could play in favour of the new technology. Issuers will add this new payment option on top of chip and pin functionality. trade sources Table 105 '000 cards Debit Cards Category Performance: Number of Cards in Circulation 2005-2010 2005 Debit Function Source: 2006 68.5 2009 5.5 228. Electronic Direct/ACH Transactions are expected to become one of the main competitive elements in debit cards in the UK over the forecast period. Although transaction safety could be an issue for many British consumers. trade press.791. The reduction will be capped at 0. technological innovation over the forecast period will come in the form of contactless technology. trade interviews. trade associations. and by 2009 all debit cards issued in the UK included chip-and-pin technology.7 10.518.624. For example. • • • CATEGORY DATA Table 104 Debit Cards Category Performance: 2005-2010 2005 Number of transactions (mn) Transaction value (£ mn) Source: 2006 4.0 4. the pressure on member banks might influence the decisions taken by them about MIF reduction.9 202.2 290.384.5 2005/10 TOTAL 52. which is likely to become increasingly popular as the forecast period progresses. company research. and its success will depend on the number of retailers interested in using it. In late April 2010.0 Euromonitor International from official statistics.7 Euromonitor International from official statistics. thus curbing the growth of debit card payments.Financial Cards and Payments United Kingdom • Banks and building societies will look for new ways to increase their revenues over the forecast period.8 66.6 249.6 7. The increasing popularity of internet banking in the UK is expected to push Electronic Direct/ACH Transactions over the forecast period. trade interviews.0 2009 80.327.1 264.203.893.938. trade interviews. company research.271. trade associations. trade press.4 2008 5.8 10. However.2% for four years.

The First Direct Others Total Source: Euromonitor International from official statistics.6 24.0 2007 13.224.9 10.1 3.181.5 31.705.7 5.0 2007 45.3 894.913.152.518.6 71.991.036.624.800.837.139.0 2006 38.212.843.569.6 5.811.0 12. company research.053.9 40.7 2.0 71.600.7 5.3 6.585.8 12.0 25.604.3 12.0 1.5 12.3 4.5 22.2 35.1 Lloyds TSB Group Plc Royal Bank of Scotland Group Barclays Group Plc HSBC Bank Plc Bank of Scotland plc Abbey National Plc Nationwide Building Society Clydesdale Bank Plc Alliance & Leicester Plc  Euromonitor International Page 59 . trade associations.050.721. trade interviews.417.432.3 12.2 13.421.348.3 5.0 4.2 7.813.610.481.4 2.882.090.0 7.450.5 3.918.984. trade sources Table 108 '000 cards Company Debit Cards: Number of Cards by Issuer 2005-2009 2005 11.002.0 66.9 1.5 9.0 24.3 2007 44.2 15.8 30.3 66.115.7 7.2 2.7 4.1 6. company research.610.874.4 Euromonitor International from official statistics.709.559.4 76.7 4.7 10.294.956.180.775.4 2.372.0 24.966.Financial Cards and Payments United Kingdom Table 107 % cards growth Debit Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Debit Function Source: 2005-10 CAGR 4.7 1.744.935.487.916. trade press.3 3.2 29.313.148.479.213.172.835.142.2 4.9 3.367.333.9 Lloyds TSB Group Plc Royal Bank of Scotland Group Barclays Group Plc HBOS Group HSBC Bank Plc Abbey National Plc Nationwide Building Society Clydesdale Bank Plc Alliance & Leicester Plc Co-operative Bank.3 7.103.0 1.105.1 24.488.0 2.1 3.327.3 3.8 6.752.1 26.359.0 68.7 12. company research.8 29.403.939.9 2.6 12.2 1.059.557.9 13. trade sources Table 110 £ million Company Debit Cards Payment Transaction Value by Issuer 2005-2009 2005 33.0 3.1 35.1 27.959. trade interviews.8 38.0 2. trade sources Table 109 '000 cards Company Debit Cards: Number of Cards by Operator 2005-2009 2005 42.633.6 11.945.936.953.991.2 3.0 2006 12.0 11.695.056.238.5 11.115.6 2005/10 TOTAL 25.978.887.9 1.348.609.271.0 2009 53. trade associations.598.155.0 4.704.100.256.6 9.935.0 2.6 7.445.786.8 1.0 2009 47.2 80.9 Visa Europe MasterCard International Inc Total Source: Euromonitor International from official statistics.9 4.0 2008 50.0 68.5 1.177.151.6 29.2 6.313.4 41.429.018.0 2008 14.033. trade associations.7 27.4 1. trade interviews.435.039.6 15.112.5 26.8 4.402.9 919.9 10.4 19.9 10.5 22. trade press.0 2009 14.722.764.277.4 7.0 2.432.0 6.8 26.0 26.876.098.1 8.2 76.721.7 13.646.424.624.2 2008 46.847.4 80.4 1.346.654.556.271.1 4.302.580.0 2006 43.302.494.285.9 21. trade press.523.0 8.

637. company research.480.327.7 83.711.419.458. trade associations.7 0.0 228. trade sources Table 115 % cards growth Debit Cards in Circulation Forecast Category Performance: % Growth 2010-2015 2010-15 CAGR Debit Function Source: 2010/15 TOTAL 23.1 202. trade press.1 2012 7.203.834.821.3 Euromonitor International from official statistics.0 264.933.5 176.618.997.1 25.718. trade interviews.432. trade interviews.570.444.500. trade press. trade press.474.8 2014 101.4 83.2 2010/15 TOTAL 23. trade sources Table 114 % growth Debit Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 4.3 202.0 3.506.600.6 41.791.389. The First Direct Others Total Source: 2.7 3.4 4.027.Financial Cards and Payments United Kingdom Co-operative Bank.6 176.867.0 Euromonitor International from official statistics.793.0 2015 7.0 Euromonitor International from official statistics.2 2015 103.9 264.203.887. trade sources Table 113 '000 cards Debit Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 2010 Debit Function Source: 2011 88.327.771.1 395.3 2013 7.871.7 22.156.585.852. trade press. trade sources Table 111 £ million Company Debit Cards Payment Transaction Value by Operator 2005-2009 2005 104.647.296.296.0 249.0 2007 144. trade interviews.545.3 89.9 2014 7.6 3.7 2013 98.538. trade interviews.4 411.791.178.2 371.6 4.843.7 249.5 2009 174.771.8 Euromonitor International from official statistics.9 312. trade associations.880.7 17.481.4 2008 164. trade associations.2 290.480.9 28.8 2012 94. trade associations. company research.2 342.458.8 228. company research.0 4.0 2.7 2.3 2.0 Euromonitor International from official statistics.7 0.7 78. company research.5 5. trade sources Table 112 Debit Cards Forecast Category Performance: 2010-2015 2010 2011 6. trade interviews.354.0 Visa Europe MasterCard International Inc Others Total Source: Euromonitor International from official statistics.7 0. trade press. company research.4 4. trade sources  Euromonitor International Page 60 .770. trade associations. trade press. company research.8 85.3 7.593.7 2006 123. trade associations.0 18.439.1 71.7 Number of transactions (mn) Transaction value (£ mn) Source: 6.8 4.696. trade interviews.335.506.

Financial Cards and Payments United Kingdom  Euromonitor International Page 61 .

In the case of Selfridges. Outfit and Miss Selfridge. pushed mainly by clothing and footwear specialist retailers. Topman.30 if paid for with an Oyster card.Financial Cards and Payments United Kingdom PRE-PAID CARDS IN THE UNITED KINGDOM CATEGORY ANALYSIS HEADLINES • • • • • Pre-paid cards transactions increases in value by 16% in 2010 while transactions volume increases by 32% Growth in general purpose reloadable cards pushes closed loop pre-paid cards to 92% of total pre-paid cards in circulation during 2010 Average spend per card declines by 5% in 2010. Against this background. The company also allows customers purchasing these cards to top up the gift cards with any value from £10 to £300 and they can be registered online for protection against theft or loss. TfL first introduced a campaign to make clear that the cards could be reused indefinitely. euros or US dollars. Thanks to the popularity of merchant issued gift cards. while the same journey costs only £1. The fact that paying with the card is much cheaper that using cash for the same journey is the prime reason for its overwhelming popularity.20. Open loop pre-paid cards recorded healthy growth of 20% in transactions value in 2010. This means that almost every single Londoner carries an Oyster card. the value of the cards can range from £10 to £1. Massimo Dutti and Bershka. This was mainly due to the popularity of TfL’s pre-paid Oyster travel cards. bringing the total number of cards in circulation to some 6. For example. The ICE Pre-paid Money Travel Card allows cardholders to purchase the card pre-paid in sterling. falling to £187 The popularity of Oyster card on London’s transport network means Transport for London remains the leader in pre-paid cards in 2009 Pre-paid cards is set to increase in transaction volume at a CAGR of 20% over forecast period to 781 million in 2015 while transaction constant value will rise at a CAGR of 6% to £15. the policy changed in May 2009 when TfL decided to introduce a £2 deposit for any new Oyster card issued. Transport for London’s (TfL) Oyster card is the most popular way of paying when using the public transport network in the British capital. Transport for London estimates that around 80% of its total revenue come from commuters using Oyster cards. Oasis and Warehouse. This brings convenience to travellers as they immediately know how much money is available • • • •  Euromonitor International Page 62 . closed loop pre-paid cards transactions value increased by 15% in 2010. Although the campaign helped reduce the number of non-active cards. the technological costs attached to issuing new cards were the reason for TfL introducing the £3 deposit policy.000. both open loop and closed loop pre-paid cards recorded a much more positive performance than other categories in financial cards and payments in the UK during 2010. a single bus trip paid for in cash costs £2. Topshop gift cards have proved to be very successful among young consumers as gifts for friends. while the total number of cards in circulation increased by 22%. and Inditex. Aurora Fashions Ltd. Upmarket department stores such as Selfridges also offer gift cards with the value set by the customer who purchases the card. the operator of Karen Millen. However.7 billion TRENDS • In a repeat of the situation which prevailed in 2009. the operator of retailing brands such as Topshop. As TfL noticed that many of its passengers were failing to bring their Oyster cards with them when renewing their season tickets. the operator of Zara. notably: Arcadia Group. closed loop pre-paid cards continued to see very strong growth in 2010 as transactions increased in number by 33%. Oyster cards were distributed for free following their initial introduction in London and were available for the purchase of a season ticket of at least one week in duration. which was increased to £3 in 2010. Open loop pre-paid cards transactions volume increased by 31% in 2010 while the number of cards in circulation increased by 22%.7 million.

some issuers focus on offering cards with good value for money when used abroad. it owns cards such as the Fidenza Village Gift Card. Transport for London (TfL) is the leading issuer and operator. The second player in open loop pre-paid cards in 2009 was National Grid Plc. For example. The company offers its British customers the possibility of using closed loop pre-paid cards to pay for its services. closed loop pre-paid cards are common for foodservice outlets such as restaurants and coffee shops including Pizza Hut. For example. Pizza Express. the competitive environment is far too fragmented to track the success of the majority of operators and issuers. According to TfL. Currently the Oyster card’s pre-paid function cannot be used on National Rail trains in London and Oyster Cards cannot be purchased at railway stations in the London metropolitan area. which can be used at all European outlets within Chic Outlet Shopping Villages as well as at any retailer which accepts MasterCard cards. specifically retail outlets. The exchange rate is fixed at the time of loading the funds in the card. The significant difference in the price of a fare between cash payment and the use of an Oyster card has helped to establish TfL as the leading player and also as the leading operator as the company is responsible for administering both sides of its pre-paid cards ticketing system. However. For example. In order to lure consumers to their pre-paid cards. credit cards amounted to £110. • The volume and value of pre-paid card transactions remains quite low in the UK in comparison with other payment instruments such as credit and debit cards. This service is widely used among people living is shared households as well as among the unbanked and consumers who are unable to obtain permission from their banks to set up a direct debit payment and wish to avoid the inconvenience of visiting a post office or bank branch in order to pay their utility bills. and the popularity of schemes such as the National Grid household power payment system among the unbanked and underbanked population are combining to make pre-paid cards an increasingly popular payment method in the UK. Moreover. Starbucks and Prêt A Manger. These cards also have a conversion charge of 1. National Grid accounted for 9% of total transactions value in 2009. The landscape within closed loop pre-paid cards is quite different to that of open loop pre-paid cards. in 2009 railway stations were fitted with entry and exit gates which allow commuters to use their Oyster cards both as prepaid or season tickets. MasterCard has a very well established presence in the UK and has several different pre-paid cards schemes in operation.6 billion. Service companies which make use of closed loop pre-paid cards include hairdressing salons such as Toni & Guy. a company which specialises in pre-paid cards with value calculated in euros or dollars. As a result of such a wide diversity of different companies offering closed loop pre-paid cards. offers the possibility of withdrawing cash abroad without charging fees. the leading issuer in open loop cards with a 62% total value share in 2000.1 billion in 2010 while pre-paid cards only reached £11. By paying in local currency. there are many different types of merchants in the UK which offer such cards. Many stations were provided with self-service machines where passengers can topup their Oyster cards. TfL held a 25% value share in 2009 and its Oyster card accounted for 13% of total pre-paid cards in circulation. including the many hundreds of thousands of commuters using National Rail services to travel into London daily from outlying towns and suburbs. With respect to closed loop pre-paid cards. • • • • •  Euromonitor International Page 63 . with MasterCard as the operator. Caxton. the leading issuer of open loop pre-paid cards in the UK. cardholders are also able to avoid the high exchange rates which are generally applicable to foreign cards. COMPETITIVE LANDSCAPE • The almost mandatory possession of the Oyster card for Londoners as it gives access to the city’s public transport network makes Transport for London (TfL) the leading issuer of pre-paid cards in the UK in value terms.Financial Cards and Payments United Kingdom on their cards in the local currency of the country being visited. Acceptance of the Oyster card was extended to London’s commuter railway network in 2009. As issuer TfL accounted for 14% of total cards in circulation and 36% of total transactions value in 2009. in 2009 MasterCard International still accounted for 86% of total cards in circulation in open loop pre-paid cards.3% and are issued by Newcastle Building Society. National Grid cards can be topped up at newsagents and are plugged into meters within customers’ homes. Although Visa Europe performed positively in pre-paid cards operators over the review period. the extension of the Oyster card in London to all commuters. one of the largest utility companies in the UK. together with Newcastle Building Society. spas such as Spa Finder and ticket services such as Ticketmaster.

This would benefit open loop pre-paid cards to the detriment of merchant gift cards. and the extension of contactless technology will also allow card issuers to apply pre-paid functions to more debit and charge cards as the number of cards with microchips and contactless features will increase massively. moving from closed loop to open loop functionality. M-commerce is expected to become an important competitor to pre-paid cards in the UK during the forecast period. This would offer pre-paid cardholders more options. • • • • • •  Euromonitor International Page 64 . MasterCard announced its acquisition of Travelex’s pre-paid Card Programme Management (CPM). PASS is an open loop pre-paid card which is marketed to adults who then give it to teenagers as an e-purse.londonmidland. this niche still has a long way to go before it can compete with more established pre-paid cards in terms of scope. This is a contactless card which passengers can use to purchase rail tickets online and it can also be used as a travel pass. especially as smart phones are increasing the usability of mobile communications devices.com/tickets-and-fares/the-key/). for example enabling them to withdraw money from ATMs. MasterCard International signed a deal in late 2010 with TfL to brand the wallets given away free for use with Oyster cards in London in 2011. the transport company Go-ahead Group launched a trial for its closed loop card called The Key (http://www. its contactless open loop payment system. American Express Co launched its PASS pre-paid card in 2010 in the US and the company is likely to bring the scheme to the UK at some stage during the forecast period. remaining the most popular pre-paid card in the UK. Transactions value is expected to increase in constant value at a CAGR of 6%. Acceptance of the Oyster card was extended to London’s commuter rail network in 2009 and it is expected that all railway stations in the London metropolitan area will soon have self-service machines where passengers can top up their Oyster cards. However. credit cards and debit cards and also as a tool for parents to teach financial skills to their children as the parent can check the balance online and reload the card when the balance becomes low. Retailers issuing closed loop pre-paid merchant issued gift cards are expected to sign more agreements with Visa Europe and MasterCard International in order to make their pre-paid cards more multifunctional. Cities such as Manchester and Birmingham might follow the capital’s example and move towards pre-paid cards for their respective transport networks. thereby boosting the use of open loop prepaid cards. Nevertheless.Financial Cards and Payments United Kingdom • In February 2009. which has already been met by UK card issuers. Thanks to smart technology. The deal is expected to be completed during the first half of 2011 and will cost MasterCard £290 million upfront. with an earn-out of up to an additional £35 million if certain performance targets are met. while transactions volume is expected to rise at a CAGR of 20%. MasterCard is believed to have paid a multimillion pound sum to use this platform to promote PayPass. It is positioned as a safer alternative to cash. In December 2010. it is unclear whether commuters living in London’s outlying towns and suburbs will be able to top up their Oyster cards at their local ticket offices or whether they will be required to visit an underground station or TfL licensed newsagent in order to do so. This deal could be the beginnings of TfL moving its closed loop pre-paid Oyster card to an open loop pre-paid card incorporating MasterCard payment technology. the migration to the EMV standard. Closed loop merchant issued gift cards are expected to account for the bulk of both volume and value growth. Closed loop pre-paid cards are expected to be subject to major increases in all measures if schemes similar to London’s Oyster card are implemented in other British cities. However. TfL’s Oyster card is expected to retain its leadership in pre-paid cards over the forecast period. • PROSPECTS • Pre-paid cards is expected to register positive growth over the forecast period and gain further ground in financial cards in the UK. the company expects the passenger queuing times will be reduced. The success or failure of Go-Ahead Group’s The Key pre-paid card ticketing scheme will be a significant influence on the actions to be taken by other British cities in terms of moving towards pre-paid ticketing for public transport.

0 26. trade sources Table 118 Closed Loop Pre-paid Cards Category Performance: 2005-2010 2005 2006 39.9 2010 168. trade associations.2 3.991.100.4 7. company research. trade associations.2 11.8 31.0 8.621.875.5 2. trade interviews.5 275.063.0 2009 106.454.018.254.8 Number of transactions (mn) Transaction value (£ mn) Source: 10.0 2008 35.5 Number of transactions (mn) Transaction value (£ mn) Source: 22.5 2009 127.6 3.477. company research.0 2007 57.147.5 50. trade press.9 9.500.2 2005/10 TOTAL 838. trade press. trade associations.8 2010 139.908.373.1 7.966.8 368.942.8 2008 89. trade press.0 1.8 3. trade associations.8 16. trade press.823.985.5 1.613.0 16.990.0 Euromonitor International from official statistics.5 2009 233.0 2008 80.Financial Cards and Payments United Kingdom CATEGORY DATA Table 116 Pre-paid Cards Category Performance: 2005-2010 2005 Number of transactions (mn) Transaction value (£ mn) Source: 2006 66.5 4.353.8 3.6 5. trade interviews.0 2010 57.3 2.0 Euromonitor International from official statistics.450.3 Euromonitor International from official statistics.554.3 2007 62.0 500.3 32.8 2008 170. trade press.200. trade interviews.490.9 3. company research.991.3 2007 119. trade sources Table 119 '000 cards Pre-paid Cards Category Performance: Number of Cards in Circulation 2005-2010 2005 Closed Loop Pre-Paid Function Open Loop Pre-Paid Function Pre-Paid Function Source: 2006 15.191.0 2. trade sources Table 117 Open Loop Pre-paid Cards Category Performance: 2005-2010 2005 2006 26.8 2.3 2009 46.210.241.600. trade interviews.6 5. trade sources  Euromonitor International Page 65 .0 Euromonitor International from official statistics.7 2010 308. company research.237. trade interviews.8 5.4 684. trade sources Table 120 % growth Pre-paid Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 56.750.0 Euromonitor International from official statistics.5 36.3 62.704.8 8.0 6.0 2007 24. company research.3 4. trade associations.202.8 38.

trade interviews.0 2007 5.954.1 605.3 29.0 Transport for London Newcastle Building Society National Grid plc Clydesdale Bank Plc Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.495.0 2.0 486.0 630.0 480.641.7 20.3 262.654. trade press.9 40.0 630.0 2.2 21.0 2006 4. trade sources Table 125 '000 cards Company Pre-paid Cards: Number of Cards by Operator 2005-2009 2005 3. trade associations.5 623.683.5 22.120.0 50.0 16.0 950.3 2009 6.954.0 3.0 352.217.0 200.841. trade press.990.683. trade associations.6 2005/10 TOTAL 604.0 38.8 59. company research.0 556.908. trade associations. company research.0 8.0 30.0 2.8 67.0 595.0 3. trade sources Table 123 % cards growth Pre-paid Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 2005-10 CAGR 47.0 2006 4.841.641.4 48.6 14.879.0 20.7 Transport for London MasterCard International Inc National Grid plc Visa Europe  Euromonitor International Page 66 . trade interviews.600.515.0 1.Financial Cards and Payments United Kingdom Table 121 % growth Open Loop Pre-paid Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 67.942.4 2005/10 TOTAL 654. trade press. trade press.5 929.1 2009 6.8 595.612.0 26.760.4 Closed Loop Pre-Paid Function Open Loop Pre-Paid Function Pre-Paid Function Source: 22.6 605.1 Euromonitor International from official statistics.5 2005/10 TOTAL 1.8 29.0 620.454.0 2008 6.0 600.740. trade sources Table 124 '000 cards Company Pre-paid Cards: Number of Cards by Issuer 2005-2009 2005 3.001. trade interviews.349.0 1.0 582.9 32.0 1.045. trade associations.0 Euromonitor International from official statistics.231.300.0 420. company research.0 3.0 620.7 Euromonitor International from official statistics.0 18.0 180. trade sources Table 122 % growth Closed Loop Pre-paid Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR 49.0 80.0 2008 6.0 2007 5.515.0 450.0 30. company research.0 600. trade interviews.0 9.257.

760.0 624. trade associations.500. trade sources Table 127 £ million Company Pre-paid Cards Transaction Value by Operator 2005-2009 2005 265.0 92.0 2.0 180.3 19.866.0 5.2 671.942.0 8.0 328.0 1.1 486. trade sources Table 128 '000 cards Company Open Loop Pre-paid Cards: Number of Cards by Issuer 2005-2009 2005 450.434.5 Newcastle Building Society Clydesdale Bank Plc Travelex Plc Others Total Source: Euromonitor International from official statistics.7 1.8 2008 2.948.600.1 2.875.3 2007 1.1 390.0 870.0 18.990. trade associations.526.6 38.7 1.1 463.2 9.0 253.0 26.485.250.0 10.353.267.477.8 150.612.616.0 0. trade interviews.0 675.0 1.8 4.0 555. trade interviews.991.555. trade sources Table 126 £ million Company Pre-paid Cards Transaction Value by Issuer 2005-2009 2005 1. trade press.5 333.250. company research.5 50.8 1.6 2.6 634.0 2008 2.8 1.0 671.700.237.Financial Cards and Payments United Kingdom Transco Metering Services Ltd Others Total Source: 3.859.0 2006 950. trade sources Table 129 '000 cards Company Open Loop Pre-paid Cards: Number of Cards by Operator 2005-2009 2005 2006 2007 2008 2009  Euromonitor International Page 67 .257. company research. trade associations.454.650. company research.875.0 2.2 68.7 Transport for London Newcastle Building Society National Grid plc Clydesdale Bank Plc Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.0 16.200.3 3.915.5 2009 2.9 3.086.005.0 28.4 3.0 671.0 30. company research.0 1.650.1 607.823. trade interviews.866.985.0 2006 1.1 556.0 1.5 7.0 2006 634.908.0 50.064.029.4 337.0 7. trade associations.4 2.847.991.3 3.823.477.7 2.426.8 2009 2.3 3.5 2009 2. trade press.0 675.9 4.0 1.178.7 MasterCard International Inc Transport for London National Grid plc Visa Europe Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.670.0 1.0 9.7 500.2 3.985.8 3.600.0 1.3 2007 1. trade press.0 Euromonitor International from official statistics.3 906.2 671.5 272.8 267.485.0 9.8 2008 2.0 12.0 2.0 420.3 5.0 624. trade press.0 2007 1.3 39.3 317.727. trade interviews.8 634.086.

trade interviews. trade associations. trade interviews.654.0 2007 1.8 582.500.0 2008 6.0 2006 4.0 2.0 2008 2.2 386.1 3.0 9.859. trade interviews.0 150.0 28.0 684.841. trade sources Table 133 '000 cards Company Closed Loop Pre-paid Cards: Number of Cards by Operator 2005-2009 2005 3.6 35. trade press.0 2006 555.0 9.600.2 92. trade associations.2 3.555.1 272.0 2006 634. trade press.029.0 15.0 80.0 1.0 2009 1.4 0. trade interviews.7 4.0 3.0 2008 6.6 390.0 2007 5.0 2009 2.948.0 2007 5.2 9. trade sources Table 130 £ million Company Open Loop Pre-paid Cards Transaction Value by Issuer 2005-2009 2005 253.267. trade sources Table 131 £ million Company Open Loop Pre-paid Cards Transaction Value by Operator 2005-2009 2005 265. trade sources Table 132 '000 cards Company Closed Loop Pre-paid Cards: Number of Cards by Issuer 2005-2009 2005 3.237.4 0.0 3.750.0 2007 1.0 39.683.9 4.4 2.0 18.0 20. company research.5 46.0 2006 4.200.0 620.683.954.426.0 620.0 1.450.0 1.353.0 605.0 275.5 674.490.0 0. trade press.0 630.8 3.001.5 Euromonitor International from official statistics.0 8.8 Newcastle Building Society Clydesdale Bank Plc Travelex Plc Others Total Source: Euromonitor International from official statistics.6 352.0 24.0 605.0 50.0 28. company research.0 39.Financial Cards and Payments United Kingdom MasterCard International Inc Visa Europe Total Source: 480.254.5 Transport for London National Grid plc Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.4 275.6 2009 6.4 463.0 600.0 3.120.9 35.0 213.0 595.0 200.426.0 595.0 267.0 12.0 2.641.6 684.0 2008 1.450.434.0 2.3 0. trade associations.0 630.0 0.727.641.859.954.2 1.029.7 3.515.670.434.178.3 333. company research. company research.6 2009 6.515.300. trade associations.0 0.0 0.670.018.100.018.704.750.8 MasterCard International Inc Visa Europe Others Total Source: Euromonitor International from official statistics. trade press.554.0 10.8 2.0 600.841.0 500.0 3.0 18.5 Transport for London National Grid plc Transco Metering Services Ltd Others  Euromonitor International Page 68 .

966.5 Euromonitor International from official statistics.0 2014 700.079.100. trade interviews.0 6.6 2013 273.485.5 Number of transactions (mn) Transaction value (£ mn) Source: 308.0 870.544.239.0 624. trade press.5 2.0 15.6 4.202. company research.086.6 13.5 Number of transactions (mn) Transaction value (£ mn) Source: 139.8 634. company research.4 2014 383.086. trade sources Table 137 Open Loop Pre-paid Cards Forecast Category Performance: 2010-2015 2010 2011 179.0 624.616.0 5. trade associations.0 24.3 2012 226.0 5.3 Euromonitor International from official statistics.191.0 2006 1.0 2006 1.8 1.224. trade interviews.1 3.700. company research.0 671.8 1.9 15.0 870.6 46.8 2008 2.251.3 3.621.4 14.373.3 4.3 3.0 2012 499.0 328.241. trade press.250.966. trade associations.6 Number of transactions 168.0 671.879.797.9 6. trade associations.5 2014 317.3 2007 1.7 2012 273.8 2015 356.4 6.0 5.Financial Cards and Payments United Kingdom Total Source: 8. trade associations.8 2008 2.5 2009 2.739.0 671.2 11.0 328.241.4  Euromonitor International Page 69 .554.616.9 Transport for London National Grid plc Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.0 12. trade sources Table 138 Closed Loop Pre-paid Cards Forecast Category Performance: 2010-2015 2010 2011 216. trade sources Table 134 £ million Company Closed Loop Pre-paid Cards Transaction Value by Issuer 2005-2009 2005 1.650.3 2007 1.0 2.0 675.5 15.191.254.250. trade associations.884.8 Euromonitor International from official statistics.0 2013 334.0 4.847.0 2.0 35.0 671.490. trade press. trade press.8 3.0 6.1 2015 780.700.866. trade interviews.202.704.485. trade sources Table 136 Pre-paid Cards Forecast Category Performance: 2010-2015 2010 2011 396.5 2.0 4. company research.8 634. trade interviews.5 2009 2.511. trade press.6 2013 607.9 Transport for London National Grid plc Transco Metering Services Ltd Others Total Source: Euromonitor International from official statistics.373.4 2015 423. trade interviews. trade sources Table 135 £ million Company Closed Loop Pre-paid Cards Transaction Value by Operator 2005-2009 2005 1.866.847.613. company research.0 675.650.1 3.

9 9.2 8. trade associations.063.7 2010/15 TOTAL 65.6 5.666.860.3  Euromonitor International Page 70 .325.3 62.4 75.050.6 84.6 93.1 Euromonitor International from official statistics. trade press.3 2013 85.5 8.8 57.6 13. trade interviews. trade press.679. trade associations.4 Euromonitor International from official statistics.043.9 103.827. trade press. trade interviews. trade associations.2 35.147.6 8.4 Euromonitor International from official statistics. trade interviews. company research.9 99.9 10.0 2012 77. company research.1 6.4 8.005. trade sources Table 140 % growth Pre-paid Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 20.8 66. trade press.4 6.429.4 2014 91.5 11.6 11.5 10.446. trade interviews.4 8. trade sources Table 141 % growth Open Loop Pre-paid Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 20.752.0 Euromonitor International from official statistics.626.679.913.9 12. trade associations.1 2015 94.7 6.4 89.603.8 Euromonitor International from official statistics.378.196.1 2010/15 TOTAL 151. trade sources Table 143 % cards growth Pre-paid Cards in Circulation Forecast Category Performance: % Growth 2010-2015 2010-15 CAGR Closed Loop Pre-Paid Function Open Loop Pre-Paid Function Pre-Paid Function 10.9 10. company research.7 2010/15 TOTAL 155.991.9 8.9 74.8 7. company research. trade press. trade interviews. company research.3 2.4 4.Financial Cards and Payments United Kingdom (mn) Transaction value (£ mn) Source: 7.402. trade associations.557. trade sources Table 142 % growth Closed Loop Pre-paid Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR 20.3 2010/15 TOTAL 153.4 10. trade sources Table 139 Pre-paid Cards Forecast Category Performance: Number of Cards in Circulation 20102015 '000 cards 2010 Closed Loop Pre-Paid Function Open Loop Pre-Paid Function Pre-Paid Function Source: 2011 68.210.406.5 0.

trade associations. trade interviews. trade sources  Euromonitor International Page 71 . company research.Financial Cards and Payments United Kingdom Source: Euromonitor International from official statistics. trade press.

John Lewis is currently offering co-branded credit cards with MasterCard as the operator. ranked in second and third players in 2009. at least partially. while transactions volume falls by 21% to 36 million Retailers continue moving to third-party issuers. the fallout of the global economic crisis adversely impacted upon the profitability of issuing store cards. Much like credit cards. M&Co and Selfridges for the issuing of these retailer’s store cards. LaSer UK and Marks & Spencer Financial Services Plc. High interest rates represent one of the main factors deterring British consumers from using store cards. which reached an agreement with HSBC Holdings Plc. While retailers enjoyed the benefits of issuing store cards when financial cards enjoyed stronger performances. An example of this was Marks & Spencer Financial Services Plc. The high interest of store cards continued to play a key role in the waning popularity of store cards in the UK during 2010 as British consumers were more aware than ever of the high cost of store card use. abandoning their own store cards in favour of co-branded credit cards Average store card spend per transaction increases by 6% to £57 in 2010 Santander UK plc rises to pole position in store cards with a 40% volume share in 2009 thanks to its acquisition of GE Capital Bank Ltd Store card transactions is set to decrease in constant value at a CAGR of -13% over the forecast period while transactions volume will fall at a CAGR of -15% TRENDS • Store cards posted a negative performance again in 2010 as retailers continued moving away from offering their own store cards towards offering co-branded credit cards. while LaSer collaborates with USC. as a result of its acquisition of GE Capital Bank Ltd. with 18% and 12% respectively. Some store cards have interest rates as high as 30% APR.9% APR.1 billion. store cards proved susceptible to the negative economic situation which subsisted in the UK during 2010. while the average credit card in the UK has interest levied at around 17% APR. High interest rates and the lack of real differentiation between store cards and alternatives such as credit cards played an important role in the ongoing demise of store cards in the UK. Its advantageous position is due to the Marks & Spencer chain being a much loved part of British culture. with a 6% decrease registered in the number of transactions per card. the Miss Selfridge store card. Many issuing retailers unloaded their respective store card operations onto financial card issuing banks. the number of store cards in the UK fell by 17% to 10. Top Shop. For example. Marks & Spencer issues store cards solely for its department store outlets. The decrease in popularity of store cards in the UK during the review period affected all major players. Only Ikano •  Euromonitor International Page 72 .8 million cards.Financial Cards and Payments United Kingdom STORE CARDS IN THE UNITED KINGDOM CATEGORY ANALYSIS HEADLINES • • • • • Store card transactions decreases in value by 17% in 2010 to £2. Santander UK plc’s store cards portfolio includes retailers such as Debenhams. Dorothy Perkins and House of Fraser. two million fewer than in 2009. • • COMPETITIVE LANDSCAPE • Santander UK plc attained the leading position in store cards in the UK in 2009. issued in conjunction with Santander UK plc. Against this background. with many retail companies reporting a decrease in the actual number of its store cards in circulation. while others such as John Lewis Partnership Plc have maintained their store cards portfolios. accounting for 40% of total cards in circulation. charged 29.

trade associations. company research. • • • • CATEGORY DATA Table 144 Store Cards Category Performance: 2005-2010 2005 Number of transactions (mn) Transaction value (£ mn) Source: 2006 67. • In light of the high interest rates charged by store cards issuers. with many consumers paying off their debts and avoiding any kind of spending on credit as a precautionary measure. the total number of store cards will also experience a significant decline over the forecast period. John Lewis Partnership Ltd no longer offers its so-called ‘account card’.1 3. In these times of economic uncertainty. Against this background.1 2. For example. falling at a CAGR of -13% over the forecast period. trade interviews. Unemployment in the UK remained at around 8% in 2010 and it is likely to stay at this level for at least the first half of the forecast period. store cards are expected to continue suffering over the early stages of the forecast period as consumers avoid the high interest rates which store cards tend to carry. while store cards can only be used at the outlets of the issuing retailer. younger consumers are proving much less enthusiastic with regards to store cards as brand loyalty is far lower among such consumers. regular users of store cards who pay off the full balance in a timely fashion could still enjoy greater benefits from using their store cards than if they were to move towards credit cards. with an average transaction of £72. Rewards programmes from certain retailers will not be sufficient to maintain the current levels of store card ownership. while transactions constant value is also set to decrease. trade press.9 3.6 2. falling to 7 million by the end of the forecast period.4 3. Many retailers which previously offered store cards are withdrawing them altogether.765. Given the flurry of movements towards co-branded credit cards. the likes of which has not been seen for many years. Both retailers are already issuing co-branded credit cards in conjunction with MasterCard and it is possible that all cardholders could be moved towards these schemes in a bid to optimise resources. Consumers can choose between a co-branded credit card with an interest rate in line with credit cards offered by high street banks or a store card with a much higher APR. Nevertheless. the co-branded credit cards which are offered by the same retailers are proving strong competitors for store cards.0 2008 55. Although women in the 55-64 age segment remain the key demographic for the store cards of clothing and footwear specialist retailers. The company is attempting to convince all current holders of its account card to move towards its so-called ‘partnership card. let alone attract new store card holders. trade sources  Euromonitor International Page 73 .0 2009 46.067. • PROSPECTS • Store cards in the UK is expected to experience a strong decline over the forecast period.863. retailers such as John Lewis and Marks & Spencer could potentially end up moving all of their store card holders towards co-branded credit cards. This high level of unemployment has engendered a high level of debt awareness among British consumers. As well as decreases in transactions volume and value. the result of the increasing presence of IKEA outlets.2 2.Financial Cards and Payments United Kingdom Financial Services Ltd saw a slight increase in the total number of store cards in circulation during 2009.8 83.0 2007 61.042.6 2010 36. All of these negative figures mean that the number of transactions per card is expected to reach just over two per year in 2015. The former allows cash-strapped British consumers to use the card to pay at any other retail outlets which accept credit cards.0 Euromonitor International from official statistics.488. consumers in the UK are moving towards cobranded credit cards. Transactions volume is expected to fall at a CAGR of -15%. which offer more flexibility and more favourable interest and other terms and conditions.366. a credit card which has MasterCard as its operator.

0 673.5 Santander UK plc LaSer UK Marks & Spencer Financial Services Plc Royal Bank of Scotland Group Home Retail Group Ikano Financial Services Ltd John Lewis Partnership Plc GE Capital Bank Ltd Creation Financial Services Ltd GUS plc Others Total Source: Euromonitor International from official statistics.455.0 Euromonitor International from official statistics.800.2 1.591.0 17.6 2005/10 TOTAL -39.125.8 1.161. trade press.5 918.6 674. trade press.068.Financial Cards and Payments United Kingdom Table 145 '000 cards Store Cards Category Performance: Number of Cards in Circulation 2005-2010 2005 Store Cards Source: 2006 15. trade associations.5 1.4 7.0 696.6 -45.0 1.4 -11. company research.3 3. trade sources Table 149 £ million Company Store Cards: Payment Transaction Value by Issuer 2005-2009 2005 2006 2007 2008 2009  Euromonitor International Page 74 .1 14. trade associations.4 2.637.5 6. company research.799.0 650.5 886.044.6 Euromonitor International from official statistics.875.548.9 861.3 2005/10 TOTAL -56.947.9 845.3 757.0 2008 2.211.815.9 12. trade interviews.0 883.9 1.593. trade press.1 -21.3 2. trade interviews.016.4 517.0 2007 2. trade sources Table 147 % cards growth Store Cards in Circulation Category Performance: % Growth 2005-2010 2009/10 Store Cards Source: 2005-10 CAGR -9.8 540.7 1.5 2010 10.814.934.087.1 1.5 580.9 Euromonitor International from official statistics.637.0 783.0 15.031.0 15.5 2009 5.030.0 2006 2.605.8 755.324.068.5 17.0 2008 14. trade sources Table 146 % growth Store Cards Category Performance: % Growth 2005-2010 2009/10 Number of transactions Transaction value Source: 2005-10 CAGR -15.404.5 1.0 2007 15.373.934.947.4 -16. trade interviews. trade press.4 6. trade interviews.5 2009 12. trade associations.8 1. company research.0 1. trade sources Table 148 '000 cards Company Store Cards: Number of Cards by Issuer 2005-2009 2005 2.735. trade associations.1 6.959.9 1.6 1. company research.800.224.6 -16.142.4 737.875.

0 1.8 Euromonitor International from official statistics.9 2014 18.7 2015 15.2 118.366. trade press. trade associations.475. company research.749.1 2014 7. company research. trade sources Table 152 % growth Store Cards Forecast Category Performance: % Growth 2010-2015 2014/15 Number of transactions Transaction value Source: 2010-15 CAGR -15. trade sources Table 151 '000 cards Store Cards Forecast Category Performance: Number of Cards in Circulation 2010-2015 2010 Store Cards Source: 2011 9.6 202.3 148. company research.272.166. trade interviews.5 233.324.4 2015 7.2 2. trade associations.9 571.067.3 180.5 Euromonitor International from official statistics.1 1.4 3. trade sources Table 150 Store Cards Forecast Category Performance: 2010-2015 2010 2011 29. company research.7 233.7 -12.4 -8.3 228.8 1.4 -49.0 134.2 191.0 486.1 Number of transactions (mn) Transaction value (£ mn) Source: 36.4 2012 24.765.5 510.084. trade press.040.1 Euromonitor International from official statistics.8 220.8 2010/15 TOTAL -56. trade press.7 2012 8.5 -10. trade interviews. company research.1 180.6 173.2 403. trade sources Table 153 % cards growth Store Cards in Circulation Forecast Category Performance: % Growth 2010-2015 2010-15 CAGR Store Cards Source: 2010/15 TOTAL -34.4 2.8 1.165.0 521.7 10.0 123.5 3.4 127.7 211.090.8 1. trade interviews.9 Euromonitor International from official statistics.863.6 Euromonitor International from official statistics.9 128.Financial Cards and Payments United Kingdom Santander UK plc LaSer UK Marks & Spencer Financial Services Plc John Lewis Partnership Plc Home Retail Group Royal Bank of Scotland Group Ikano Financial Services Ltd GE Capital Bank Ltd Creation Financial Services Ltd GUS plc Others Total Source: 583.262.9 203.5 1.799. trade press.6 293. trade associations.2 1.2 195. trade sources  Euromonitor International Page 75 .0 455.2 347.1 149. trade associations.0 403.652.0 937.2 229.237.9 1.042. trade associations.9 208.488. trade interviews.7 441.7 262.5 2013 7.6 3.2 226.4 2013 20. trade interviews.8 1.3 -12. trade press.5 2.292.512.1 234.

Financial Cards and Payments United Kingdom  Euromonitor International Page 76 .

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