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Regulation, Competition, and the Threat to Revenues in the UK Card Market
Datamonitor, Oct 2007, Pages: 67
Introduction
This brief forms part of the UK Plastic Cards 2007 report. It provides in depth coverage of both national and international regulatory activity that has impacted on the UK card market. The report then explains how and why issuers revenues are changing as a result of this. The report concludes with our unique Revenue Model, explaining how issuers can replace lost revenue.
Scope
The report covers all regulation in 2006 and the first half of 2007 that has affected the card market in the UK. It provides in depth analysis of how increased competition has squeezed down the profit margins of issuers. Detailed coverage of the various revenue streams in the issuance business and an explanation of how these have changed over the last year. The Card Issuance Revenue Model shows how issuers can replace revenue lost as a result of competition and regulatory change
Highlights
The UK market continues to be subject of strict new regulations. The suggested maximum default fee of £12 (as set by the OFT) has had a significant impact on the way that issuers operate, knocking off an estimated £524 million from the industrys revenue pool. Datamonitor estimates that the total revenue in the card issuance market has fallen by 7% between 2005 and 2006. The fall in income from default fees, as regulated by the OFT, was one of the main areas to suffer. In order to make up revenue that has been lost from 2005 to 2006, issuers have a number of 'levers' to pull. Datamonitors issuance model shows that a 0.5% rise in interest rates over the base rate would recoup £177m of revenue in the market.
Reasons to Purchase
Gain a clear understanding of the regulatory developments in the UK market Find out how issuers are adapting to changing market conditions. Learn how issuers can earn back revenue lost through regulatory activity and intense competition
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