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Consumer Spending Patterns - where do cards fit in?


Description: The 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.

Report Scope
Provides data and analysis on the key trends in consumer payments in the French, German, Italian, UK and US markets for the period 1999-2003
Draws on the output of our Consumer Payments Model to provide the value of payments made by pay now, deferred debit/charge and credit cards
Product splits for spending made by cheque, direct debit, credit transfer are also provided, as is a broad estimate for the value of cash payments
Provides data for the value of payments made only by consumers and as such, does not include commercial or cash acquisition transactions

Report Highlights
In 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 our 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 Purchase
Access data from our Consumer Payment Model to understand how consumers make payments, and which products are dominant
Understand which payment tools currently dominate the space, and the size of the potential market opportunity for plastic cards
Discover the views of our Cards and Payments Team on the tactics issuers should employ to capture a greater share of this market


Contents:
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
Our 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




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