Consumer Spending Patterns - where do cards fit in?

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Consumer Spending Patterns - where do cards fit in?
Market Briefing, March 2005, 1356 €

Description

IntroductionThe way in which consumers make payments in Europe and the US differs significantly between countries however, in each, general-purpose payment cards have grown in importance over time.
But where exactly do cards fit into the total consumer payments market? What are the key trends? How can issuers increase their share of the consumer payment market? This briefing provides the answers.ScopeProvides data and analysis on the key trends in consumer payments in the French, German, Italian, UK and US markets for the period 1999-2003Draws on the output of Datamonitor's Consumer Payments Model to provide the value of payments made by pay now, deferred debit/charge and credit cardsProduct splits for spending made by cheque, direct debit, credit transfer are also provided, as is a broad estimate for the value of cash paymentsProvides data for the value of payments made only by consumers and as such, does not include commercial or cash acquisition transactionsHighlightsIn 2003 the combined value of consumer payments made by cash and cheque in Europe and the US was EUR 6,265 billion, 56% of total consumer expenditure.
However, their importance has declined since 1999 when they accounted for 60% of the value of consumer spending.Electronic payments account for an important share of total consumer expenditure.
According to Datamonitor estimates, more than EUR 2,538 billion of consumer expenditure was made via direct debit and other credit transfers in 2003, representing 22.7% of the total.The share of payments accounted for by general-purpose cards was 21.3% and the value of spending on plastic cards is estimated to have been EUR 2,380 billion in 2003.
Within this, revolving credit cards are the largest segment; consumers are estimated to have made 10.6% of the value of their total expenditure by credit card in 2003.Reasons to PurchaseAccess data from Datamonitor's Consumer Payment Model to understand how consumers make payments, and which products are dominantUnderstand which payment tools currently dominate the space, and the size of the potential market opportunity for plastic cardsDiscover the views of Datamonitor's Cards and Payments Team on the tactics issuers should employ to capture a greater share of this market

Sommaire

TABLE OF CONTENTS

ABOUT DATAMONITOR 2

INTRODUCTION 6

Cards & Payments Briefings Service 6

What is this briefing about? 6

Who is the target reader? 7

How do you use this briefing? 7

Scope of the briefing 7

Datamonitor’s Consumer Payment Model 8

CONSUMER PAYMENTS – WHERE DO CARDS FIT IN? 10

Trends in consumer payments in Europe and the US 10

Cash and cheques account for the greatest share of consumer spend by value 10

Plastic cards and electronic payments have enjoyed the fastest growth 12

The way in which consumers make payments differs significantly across countries 13

Pay now cards 16

Pay now cards have grown in importance in Europe and the US 16

Pay now cards account for the greatest proportion of total consumer spending in the UK and Italy 19

Pay later cards 22

The growth of pay later cards has also exceeded that of total expenditure 22

Pay later cards have replaced cheques and high value cash payments 23

Pay later is strongest in France, the US and the UK 25

Deferred debit and charge cards are king in mainland Europe while consumers in the US and UK prefer credit 26

Electronic transfer payments 29

Direct debits have driven growth in electronic transfer payments 29

Growth in electronic transfers has occurred as a result of cheque replacement 30

Electronic transfers are most commonly used in Germany, Italy and the UK 32

Direct debits are popular across mainland Europe, while German consumers also make heavy use of credit transfers 33

Summary 37

HOW CAN ISSUERS WIN A GREATER SHARE OF CONSUMER PAYMENTS? 38

Issuers must focus on growing card activity 38

Pay now card issuers can benefit from encouraging greater POS usage 39

Do loyalty programs provide the answer? 41

Pay later cards 42

Charge and deferred debit card issuers should look to convert cash acquisition to POS transactions 42

Expanding into other areas of payments is the key for credit card issuers 45

Summary 47

APPENDIX 49

Supplementary data 50

Exchange rates used in this briefing 50

Data for Europe and the US combined 51

Country data - France 54

Country data – Germany 57

Country data – Italy 60

Country data – UK 63

Country data – US 66

Data table relating to: How Can Issuers Win a Greater Share of Consumer Payments? 69

Definitions 70

Research methodology 74

Datamonitor’s estimation methodology 74

Further Readings 77

Relevant links 77

Datamonitor’s custom research capabilities 78

Cards and Payments Team contact details 80

How to contact experts in your industry 81