financial cards and payments in uk

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Financial Cards and Payments in theUnited Kingdom

Euromonitor International

March 2011


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Financial Cards and Payments United Kingdom

Euromonitor International Page i

List of Contents and Tables

FINANCIAL CARDS AND PAYMENTS IN THE UNITED KINGDOM - INDUSTRYOVERVIEW .............................................................................................................................................2

Executive Summary ................................................................................................................................................ 2British Economy Recovers But Consumers Remain Cautious ................................................................................... 2Debit Transactions Overtakes Cash for the First Time ............................................................................................. 2Barclays Group Plc Leads Financial Cards and Payments in 2009 ......................................................................... 2Mobile Commerce Will Continue Growing in the UK............................................................................................... 2Economic Recovery Expected To Dominate the Forecast Period ............................................................................. 2Key Trends and Developments .............................................................................................................................. 2the Recovery of the UK Economy Remains Uncertain .............................................................................................. 2the British Banking Landscape Changes As A Result of the Recession ..................................................................... 3Mobile Commerce Continues Growing in the UK..................................................................................................... 4New Regulations for Issuers of Credit Cards and Store Cards ................................................................................. 5Contactless Cards Slowly Become More Popular in the UK .................................................................................... 6Market Indicators ................................................................................................................................................... 7

Table 1 Number of POS Terminals 2005-2010 .............................................................................. 8Table 2 Number of ATMs 2005-2010 ............................................................................................ 8Table 3 Value Lost to Fraud 2005-2010 ......................................................................................... 8Table 4 Card Expenditure by Location 2010 .................................................................................. 8Table 5 Card Expenditure by Category 2010 ................................................................................. 8Table 6 Financial Cards in Circulation by Type: % Number of Cards 2005-2010 ......................... 9Table 7 Domestic versus Foreign Spend 2010 ............................................................................... 9

Market Data ............................................................................................................................................................ 9Table 8 Consumer Payments: Value 2005-2010............................................................................. 9Table 9 Consumer Payments: Number of Transactions 2005-2010 ..................... ..................... .....10Table 10 Financial Cards: Number of Cards in Circulation 2005-2010 ..........................................10Table 11 Financial Cards Transactions: Value 2005-2010 ..............................................................10Table 12 Financial Cards: Number of Transactions 2005-2010 ......................................................10Table 13 Financial Cards: Number of Accounts 2005-2010............................................................11Table 14 Financial Cards: Number of Cards by Issuer 2005-2009 ..................................................11Table 15 Financial Cards: Number of Cards by Operator 2005-2009 .............................................12Table 16 Financial Cards: Card Payment Transaction Value by Operator 2005-2009 ....................12Table 17

Financial Cards: Card Payment Transaction Value by Issuer 2005-2009 .................... .....12

Table 18 Consumer Payments Forecast: Value 2010-2015 .............................................................13Table 19 Consumer Payments Forecast: Number of Transactions 2010-2015 ................................13Table 20 Financial Cards Forecast: Number of Cards in Circulation 2010-2015 ............................14Table 21 Financial Cards Forecast: Value 2010-2015 .....................................................................14Table 22 Financial Cards Forecast: Number of Transactions 2010-2015 ........................................14Table 23 Financial Cards Forecast: Number of Accounts 2010-2015 .............................................15

Definitions ...............................................................................................................................................................15 Atm Function .................... ..................... ..................... ...................... ..................... ..................... ..................... .........15 Debit Function .........................................................................................................................................................15Credit Function ........................................................................................................................................................15Commercial Credit Cards ........................................................................................................................................16Charge Card Function .............................................................................................................................................16


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

Summary 1 Research Sources ..............................................................................................................20FINANCIAL CARDS AND PAYMENTS IN THE UNITED KINGDOM - COMPANY PROFILES ........21

Lloyds Tsb Group Plc - Consumer Finance - United Kingdom .........................................................................21Strategic Direction ...................................................................................................................................................21Key Facts .................................................................................................................................................................21

Summary 2 Lloyds TSB Group Plc: Key Facts ...................................................................................21Summary 3 Lloyds TSB Group Plc: Operational Indicators ................................................................21

Company Background ..............................................................................................................................................21Competitive Positioning ...........................................................................................................................................22

Summary 4 Lloyds TSB Group Plc: Competitive Position 2009 .........................................................22National Grid Plc - Consumer Finance - United Kingdom .................... ..................... ..................... ...................23Strategic Direction ...................................................................................................................................................23Key Facts .................................................................................................................................................................23

Summary 5 National Grid Plc: Key Facts ............................................................................................23Summary 6 National Grid Plc: Operational Indicators ........................................................................23


Summary 7 National Grid Plc: Competitive Position 2009 .................................................................24Newcastle Building Society - Consumer Finance - United Kingdom ..................... ..................... ...................... .25Strategic Direction ...................................................................................................................................................25Key Facts .................................................................................................................................................................25

Summary 8 Newcastle Building Society: Key Facts ...................... ..................... ..................... ............25Summary 9 Newcastle Building Society: Operational Indicators ........................................................25

Company Background ..............................................................................................................................................25Competitive Positioning ...........................................................................................................................................26Summary 10 Newcastle Building Society: Competitive Position 2009 .................................................26Santander UK Plc - Consumer Finance - United Kingdom .................. ...................... ..................... ...................27Strategic Direction ...................................................................................................................................................27Key Facts .................................................................................................................................................................27

Summary 11 Santander UK Plc: Key Facts ...........................................................................................27Summary 12 Santander UK Plc: Operational Indicators ........................................................................27


Summary 13 Santander UK Plc: Competitive Position 2009 .................................................................28Transport for London - Consumer Finance - United Kingdom .........................................................................28Strategic Direction ...................................................................................................................................................28Key Facts .................................................................................................................................................................29


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Summary 14 Transport for London: Key Facts .....................................................................................29Company Background ..............................................................................................................................................29Competitive Positioning ...........................................................................................................................................29

Summary 15 Transport for London: Competitive Position 2009 ...........................................................30ATM CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS ................................................31

Headlines ................................................................................................................................................................31Trends .....................................................................................................................................................................31Competitive Landscape .........................................................................................................................................32Prospects .................................................................................................................................................................32Category Data ........................................................................................................................................................33

Table 24 ATM Cards Category Performance: 2005-2010 ...............................................................33Table 25 ATM Cards Category Performance: Number of Cards in Circulation 2005-

2010 ..................................................................................................................................33

Table 26 ATM Cards Category Performance: % Growth 2005-2010 .................... ..................... .....33Table 27 ATM Cards in Circulation Category Performance: % Growth 2005-2010 .................. .....33Table 28 ATM Cards Forecast Category Performance: 2010-2015.................................................33Table 29 ATM Cards Forecast Category Performance: Number of Cards in Circulation

2010-2015 .........................................................................................................................34Table 30 ATM Cards Forecast Category Performance: % Growth 2010-2015 ...............................34Table 31 ATM Cards in Circulation Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................34CHARGE CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS ........................................35

Headlines ................................................................................................................................................................35Trends .....................................................................................................................................................................35Competitive Landscape .........................................................................................................................................35Category Data ........................................................................................................................................................36

Table 32 Charge Cards Category Performance: 2005-2010 ............................................................36Table 33 Charge Cards Category Performance: Number of Cards in Circulation 2005-

2010 ..................................................................................................................................37Table 34 Charge Cards Category Performance: % Growth 2005-2010 ...........................................37Table 35 Charge Cards in Circulation Category Performance: % Growth 2005-2010 ....................37Table 36 Personal Charge Cards Category Performance: 2005-2010 ..............................................37Table 37 Personal Charge Cards Category Performance: Number of Cards in

Circulation 2005-2010 ......................................................................................................37Table 38 Personal Charge Cards Category Performance: % Growth 2005-2010 ............................37Table 39 Personal Charge Cards in Circulation Category Performance: % Growth

2005-2010 .........................................................................................................................38Table 40 Commercial Charge Cards Category Performance: 2005-2010 ........................................38Table 41 Commercial Charge Cards Category Performance: Number of Cards in

Circulation 2005-2010 ......................................................................................................38Table 42 Commercial Charge Cards Category Performance: % Growth 2005-2010 ......................38Table 43 Commercial Charge Cards in Circulation Category Performance: % Growth

2005-2010 .........................................................................................................................38Table 44 Charge Cards: Number of Cards by Issuer 2005-2009 .....................................................39Table 45 Charge Cards: Number of Cards by Operator 2005-2009 ................... ...................... ........39Table 46 Charge Cards Payment Transaction Value by Issuer 2005-2009 ......................................39


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Table 47 Charge Cards Payment Transaction Value by Operator 2005-2009 .................................39Table 48 Personal Charge Cards: Number of Cards by Issuer 2005-2009.......................................40Table 49 Personal Charge Cards: Number of Cards by Operator 2005-2009 ..................................40Table 50 Personal Charge Cards Transaction Value by Issuer 2005-2009 ......................................40Table 51 Personal Charge Cards Transaction Value by Operator 2005-2009 .................................40Table 52 Commercial Charge Cards: Number of Cards by Issuer 2005-2009 ..................... ............40Table 53 Commercial Charge Cards: Number of Cards by Operator 2005-2009 ............................41Table 54 Commercial Charge Cards Payment Transaction Value by Issuer 2005-2009 .................41Table 55 Commercial Charge Cards Payment Transaction Value by Operator 2005-

2009 ..................................................................................................................................41Table 56 Charge Cards Forecast Category Performance: 2010-2015 ..............................................42Table 57 Charge Cards Forecast Category Performance: Number of Cards in

Circulation 2010-2015 ......................................................................................................42Table 58 Charge Cards Forecast Category Performance: % Growth 2010-2015 ..................... ........42Table 59 Charge Cards in Circulation Forecast Category Performance: % Growth

2010-2015 .........................................................................................................................42Table 60 Personal Charge Cards Forecast Category Performance: 2010-2015 ...............................42Table 61 Personal Charge Cards Forecast Category Performance: Number of Cards in

Circulation 2010-2015 ......................................................................................................42Table 62 Personal Charge Cards Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................43Table 63 Personal Charge Cards in Circulation Forecast Category Performance: %

Growth 2010-2015............................................................................................................43Table 64 Commercial Charge Cards Forecast Category Performance: 2010-2015 .........................43Table 65 Commercial Charge Cards Forecast Category Performance: Number of

Cards in Circulation 2010-2015 ................... ...................... ..................... ..................... .....43Table 66 Commercial Charge Cards Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................43Table 67 Commercial Charge Cards in Circulation Forecast Category Performance: %

Growth 2010-2015............................................................................................................44CREDIT CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS ..........................................45


Table 68

Credit Cards Category Performance: 2005-2010 ..............................................................47

Table 69 Credit Cards Category Performance: Number of Cards in Circulation 2005-2010 ..................................................................................................................................47

Table 70 Credit Cards Category Performance: % Growth 2005-2010.............................................47Table 71 Credit Cards in Circulation Category Performance: % Growth 2005-2010 ..................... .47Table 72 Personal Credit Cards Category Performance: 2005-2010 ...............................................48Table 73 Personal Credit Cards Category Performance: Number of Cards in

Circulation 2005-2010 ......................................................................................................48Table 74 Personal Credit Cards Category Performance: % Growth 2005-2010 ..................... .........48Table 75 Personal Credit Cards in Circulation Category Performance: % Growth

2005-2010 .........................................................................................................................48Table 76 Commercial Credit Cards Category Performance: 2005-2010 .........................................48Table 77 Commercial Credit Cards Category Performance: Number of Cards inCirculation 2005-2010 ......................................................................................................48


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Table 78 Commercial Credit Cards Category Performance: % Growth 2005-2010 ................... .....49Table 79 Commercial Credit Cards in Circulation Category Performance: % Growth

2005-2010 .........................................................................................................................49Table 80 Credit Cards: Number of Cards by Issuer 2005-2009 .................. ...................... ...............49Table 81 Credit Cards: Number of Cards by Operator 2005-2009 ..................................................49Table 82 Credit Cards Payment Transaction Value by Issuer 2005-2009 .......................................50Table 83 Credit Cards Payment Transaction Value by Operator 2005-2009 .................... ...............50Table 84 Personal Credit Cards: Number of Cards by Issuer 2005-2009 ........................................50Table 85 Personal Credit Cards: Number of Cards by Operator 2005-2009 ...................................51Table 86 Personal Credit Cards Payment Transaction Value by Issuer 2005-2009 .................... .....51Table 87 Personal Credit Cards Payment Transaction Value by Operator 2005-2009 ....................52Table 88 Commercial Credit Cards: Number of Cards by Issuer 2005-2009 ..................................52Table 89 Commercial Credit Cards: Number of Cards by Operator 2005-2009..............................52Table 90 Commercial Credit Cards Payment Transaction Value by Issuer 2005-2009 ...................53Table 91 Commercial Credit Cards Payment Transaction Value by Operator 2005-

2009 ..................................................................................................................................53Table 92 Credit Cards Forecast Category Performance: 2010-2015 ...............................................53Table 93 Credit Cards Forecast Category Performance: Number of Cards in

Circulation 2010-2015 ......................................................................................................53Table 94 Credit Cards Forecast Category Performance: % Growth 2010-2015 ..............................54Table 95 Credit Cards in Circulation Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................54Table 96 Personal Credit Cards Forecast Category Performance: 2010-2015 ..................... ............54Table 97 Personal Credit Cards Forecast Category Performance: Number of Cards in

Circulation 2010-2015 ......................................................................................................54Table 98 Personal Credit Cards Forecast Category Performance: % Growth 2010-2015................54Table 99 Personal Credit Cards in Circulation Forecast Category Performance: %

Growth 2010-2015............................................................................................................55Table 100 Commercial Credit Cards Forecast Category Performance: 2010-2015 .................. .........55Table 101 Commercial Credit Cards Forecast Category Performance: Number of Cards

in Circulation 2010-2015 ..................................................................................................55Table 102 Commercial Credit Cards Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................55Table 103 Commercial Credit Cards in Circulation Forecast Category Performance: %

Growth 2010-2015............................................................................................................55DEBIT CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS .............................................56


Table 104 Debit Cards Category Performance: 2005-2010 ...............................................................58Table 105 Debit Cards Category Performance: Number of Cards in Circulation 2005-

2010 ..................................................................................................................................58Table 106 Debit Cards Category Performance: % Growth 2005-2010 .................... ..................... .....58Table 107 Debit Cards in Circulation Category Performance: % Growth 2005-2010 ...................... .59Table 108 Debit Cards: Number of Cards by Issuer 2005-2009 ........................................................59Table 109 Debit Cards: Number of Cards by Operator 2005-2009 ...................................................59Table 110 Debit Cards Payment Transaction Value by Issuer 2005-2009 ........................................59Table 111 Debit Cards Payment Transaction Value by Operator 2005-2009 ....................................60


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Table 112 Debit Cards Forecast Category Performance: 2010-2015.................................................60Table 113 Debit Cards Forecast Category Performance: Number of Cards in Circulation

2010-2015 .........................................................................................................................60Table 114 Debit Cards Forecast Category Performance: % Growth 2010-2015 ...............................60Table 115 Debit Cards in Circulation Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................60

PRE-PAID CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS ......................................62Headlines ................................................................................................................................................................62Trends .....................................................................................................................................................................62Competitive Landscape .........................................................................................................................................63Prospects .................................................................................................................................................................64Category Data ........................................................................................................................................................65

Table 116 Pre-paid Cards Category Performance: 2005-2010 ..........................................................65Table 117 Open Loop Pre-paid Cards Category Performance: 2005-2010 .......................................65Table 118 Closed Loop Pre-paid Cards Category Performance: 2005-2010 .....................................65Table 119 Pre-paid Cards Category Performance: Number of Cards in Circulation

2005-2010 .........................................................................................................................65Table 120 Pre-paid Cards Category Performance: % Growth 2005-2010 .........................................65Table 121 Open Loop Pre-paid Cards Category Performance: % Growth 2005-2010 ......................66Table 122 Closed Loop Pre-paid Cards Category Performance: % Growth 2005-2010 ................... .66Table 124 Pre-paid Cards: Number of Cards by Issuer 2005-2009 ...................................................66Table 125 Pre-paid Cards: Number of Cards by Operator 2005-2009 ..................... ..................... .....66Table 126 Pre-paid Cards Transaction Value by Issuer 2005-2009 ..................... ...................... ........67Table 127 Pre-paid Cards Transaction Value by Operator 2005-2009 ..............................................67Table 128 Open Loop Pre-paid Cards: Number of Cards by Issuer 2005-2009 ................................67Table 129 Open Loop Pre-paid Cards: Number of Cards by Operator 2005-2009 .................... ........67Table 130 Open Loop Pre-paid Cards Transaction Value by Issuer 2005-2009 .................... ............68Table 131 Open Loop Pre-paid Cards Transaction Value by Operator 2005-2009 ...........................68Table 132 Closed Loop Pre-paid Cards: Number of Cards by Issuer 2005-2009 ...................... ........68Table 133 Closed Loop Pre-paid Cards: Number of Cards by Operator 2005-2009 .........................68Table 134 Closed Loop Pre-paid Cards Transaction Value by Issuer 2005-2009 .............................69Table 135 Closed Loop Pre-paid Cards Transaction Value by Operator 2005-2009 .................... .....69Table 136 Pre-paid Cards Forecast Category Performance: 2010-2015 ............................................69Table 137 Open Loop Pre-paid Cards Forecast Category Performance: 2010-2015 .........................69Table 138 Closed Loop Pre-paid Cards Forecast Category Performance: 2010-2015 ...................... .69Table 139 Pre-paid Cards Forecast Category Performance: Number of Cards inCirculation 2010-2015 ......................................................................................................70Table 140 Pre-paid Cards Forecast Category Performance: % Growth 2010-2015 .................. .........70Table 141 Open Loop Pre-paid Cards Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................70Table 142 Closed Loop Pre-paid Cards Forecast Category Performance: % Growth

2010-2015 .........................................................................................................................70Table 143 Pre-paid Cards in Circulation Forecast Category Performance: % Growth

2010-2015 .........................................................................................................................70STORE CARDS IN THE UNITED KINGDOM - CATEGORY ANALYSIS ...........................................72

Headlines ................................................................................................................................................................72Trends .....................................................................................................................................................................72


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Competitive Landscape .........................................................................................................................................72Prospects .................................................................................................................................................................73Category Data ........................................................................................................................................................73

Table 144 Store Cards Category Performance: 2005-2010 ...............................................................73Table 145 Store Cards Category Performance: Number of Cards in Circulation 2005-2010 ..................................................................................................................................74Table 146 Store Cards Category Performance: % Growth 2005-2010 ..............................................74Table 147 Store Cards in Circulation Category Performance: % Growth 2005-2010 .......................74Table 148 Store Cards: Number of Cards by Issuer 2005-2009 ........................................................74Table 149 Store Cards: Payment Transaction Value by Issuer 2005-2009 ........................................74Table 150 Store Cards Forecast Category Performance: 2010-2015 .................................................75Table 151 Store Cards Forecast Category Performance: Number of Cards in Circulation

2010-2015 .........................................................................................................................75Table 152 Store Cards Forecast Category Performance: % Growth 2010-2015 .................... ............75Table 153 Store Cards in Circulation Forecast Category Performance: % Growth 2010-

2015 ..................................................................................................................................75


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FINANCIAL CARDS AND PAYMENTS IN THE UNITEDKINGDOM - INDUSTRY OVERVIEW

EXECUTIVE SUMMARY

British Economy Recovers But Consumers Remain Cautious

Although the British economy showed a recovery over the first part of 2010, Britons continued with their

austere spending habits which they developed during the economic recession. Many consumers continued to

face redundancy and unemployment and lower levels of discretionary income whilst still having the burden of

debts to repay. As British consumers were still looking for financial restructuring, they continue to think twice

about the purchase of non-essential items. Amidst this scenario, growth in financial cards and payments was

positive, albeit at a much slower pace than during the years preceding the onset of the recession.

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 abandoned their credit cards during the recession, the use of debit experienced a rapid

increase. At the same time, the use of debit cards for micropayments helped to increase the number of debittransactions as many consumers find debit transactions more convenient than paying with cash.

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. Leading British banks continued to benefit from their strong profiles and

large customer bases. The other main players in financial cards in 2009 were also all leading banks, namely

Royal Bank of Scotland Group, Lloyds TSB Group Plc and HSBC Bank Plc.

Mobile Commerce Will Continue Growing in the UK

As the penetration of smart phones in the UK keeps growing, mobile commerce is also expected to increase

significantly over the forecast period. The high popularity enjoyed by web enabled mobile phones such as the

Apples iPhone and the new generation of smartphones with android technology are helping to the intensify theexpansion of these devices. With an increasing number of retailers offering websites specifically design to be

browsed by mobile devices, British consumers will become more comfortable using these websites. At the same

time, 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.

Economic Recovery Expected To Dominate the Forecast Period

Governmental efforts to help lending institutions out of trouble are expected to have a positive impact onconsumer lending in the UK over the forecast period. Banks and other lending institutions have been asked by

the government to start lending again to consumers, although a more cautious approach will be likely to avoid

lending to high-risk individuals.

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, the UK went to the polls to elect a

new parliament in May 2010. The result was a change in the political landscape with the Labour party leaving

government after 12 years in power. The new coalition government formed by the Conservative and Liberal

Democrats faced the task of bringing the UK back on track for economic recovery.


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The main target of the coalition government was to tackle the financial deficit by implementing spending cuts

and tax rises. VAT was increased from 17.5% to 20.0% in January 2011. At the same time, unemployment

continued to be an issue in 2010 as the unemployment rate remained at 7.9% of the active population at the endof the year, according to official statistics. Within this scenario, consumer confidence reached a historic low in

December 2010 according to the Nationwide Consumer Confidence Index, standing at 53 points, well below its

long-run average of 81.

Current Impact

UK consumers remained very cautious in 2010 with regards to the money they were spending. Overall

Consumer Finance Transactions value increased by less than 2%, reaching 35.7 billion, the lowest figure in the

last ten years, according to Euromonitor International research. As Britons attempted to maintain control over

their finances, credit cards was the most affected financial cards category. After the fall in value experienced in

2009, credit cards reported only a 2% increased in transaction value in 2010. The main beneficiary of this new

and more austere financial cards environment was debit cards. As British consumers preferred to maintain fullcontrol over the amount of money they were spending and avoid the higher fees and interest rates on offer from

credit cards, debit cards transactions value increased by 10%.

Store cards were the other main casualty in 2010, which was due mainly their high interest rates and limitationsin terms of being useful in only one outlet. Store cards reported a 17% fall in transactions value. This negative

performance was accentuated by the fact that and increasing number of British retailers are abandoning storecards in favour of co-branded credit cards.

On the other hand, pre-paid cards recorded positive growth in 2010 as closed loop gift cards are becoming

increasingly popular among British consumers. 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%.

Outlook

The British economy is expected to see a slow recovery with a double dip recession remaining a possibility in

2011. Euromonitor International expects GDP growth in the UK during 2010 to have been 1.7%. The new VATrate, together with increasing inflation and unemployment, are likely to put extra pressure on British consumers

and they will react by being more cautious about when, where and how they spend their money over the forecast

period.

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. Britons will continue paying extra attention to the way in which they spend

their money, especially now that the VAT rate has been set at a higher rate of 20.0% since January 2011.

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. Store cards is set to fall in constant value at a CAGR of -13%

over the forecast period.

On the other hand, debit cards will benefit from the ongoing uncertainty in the economic situation over the

forecast period. 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. Debit cards is set to increase in constant value at a CAGR of 7% over the

forecast period.

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. If the landscape was dominated by traditional banks and financial brokers before the advent of thefinancial crisis, by 2010 the situation had changed significantly due to a flurry of mergers, acquisitions,

government bail-outs, nationalisations and new entries.


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Current Impact

The acquisition of Halifax Bank of Scotland Group (HBOS Group) by Lloyds Banking Group Plc helped Lloydsbecome the leading financial cards issuer in the UK by value. Lloyds Banking Group Plcs share of financial

cards in circulation increased to more than 9% in 2009 while the banks share of transactions value increased to

23%.

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, Santander integrated Alliance and Leicester intoits 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. At Global Brand Owner level, Santanders share of financial cards in circulation increased to 4% in 2009

while the banks value share of total transactions increased to 6%.

On the other hand, Citigroup Inc put its asset Egg Banking plc up for sale in 2010. The sale was part of the US-based banks restructuring in the wake of the financial crisis and formed a key part of its plan to sell off its

unwanted assets. Among the possible candidates for the acquisition of the worlds largest internet bank was

Barclays Group Plc. Nevertheless, 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.

At the same time, several new players decided to enter the financial services in the UK during 2010. Metro Bankbecame the first new high street bank in the UK in over 100 years. Although Metro Bank started its operations

initially only with four branches, all of them within the London area, 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.

Outlook

As the British economy remained weak at the end of 2010, consolidation among smaller players is likely to

continue over the forecast period. In a move towards consolidation, 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.

The entrance of new players into financial cards and payments is also likely over the forecast period. However,

it will be difficult for these new players to achieve the considerable size of any of the current major players,

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.

Future Impact

The government is planning to sell the nationalised Northern Rock at some point in 2011. Northern Rocks

buyer will inherit the banks not inconsiderable share of financial cards and payments.

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 is also likely to see an improvement in its performance over the forecast period, especially after

its acquisition of Church House Trust, a small regional bank. Virgin Money, like Tesco, will also benefit from

being a highly recognisable brand among UK consumers and from its putatively alternative ways of

conducting business, something which many British people are likely to find very appealing following the

collapse of the traditional banking model in the UK.

Mobile Commerce Continues Growing in the UK

The concept of mobile commerceor m-commerceis still quite new in the UK. Nevertheless, it is becoming

more popular as the number of 3G-enabled smart phones continues rising in the country. 56% of all mobilephones sold in the UK in 2009 were already 3G enabled. British consumers are moving towards smartphones in

their droves and are becoming increasingly comfortable with all of the advanced features offered bysmartphones. Britons are not only downloading ringtones and games, but are now moving towards other kinds


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of applications which are compatible with smartphones. However, the actual payment for products and services

through mobile phone remains less common.

Current Impact

Mobile commerce is growing significantly in the UK, exceeding 1 billion in 2009. The proliferation of

smartphones with 3G capability was rapid over the second half of the review period, especially following the

launch of Apples iPhone. Britons are purchasing and downloading a plethora of applications and ringtones on

their smartphones. There are an array of applications or apps on offer which confer benefits on consumerssuch as the possibility of booking airline tickets and checking in online, reserving hotel rooms and purchasing

concert tickets directly using their mobile phones.

Nevertheless, 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, although cheques have been declining at a rapid rateand will be entirely phased out over the forecast period.

British consumers now feel comfortable purchasing items with their mobile phones, although encouraging

British consumers to make payments through their mobile phones is proving more challenging. One of the mainreasons 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, despite their internetconnectivity. 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 customers monthly mobile phone bill. This is

popular amongst the unbanked and underbanked population. In the UK, this mainly applies to teenagers and

migrant workers.

Many British retailers such as Marks & Spencer and Tesco are already offering versions of their websites

especially designed to be accessed from mobile phones. These mobile sites offer better usability when accessing

through a mobile device and allow for easier viewing and payment.

Outlook

The number of 3-G mobile phones in the UK is likely to increase substantially over the forecast period. Mobile

phone manufacturers will gradually introduce devices with the necessary technology to allow payments to be

made. British consumers are expected to become more comfortable using their mobile phones as a form of

payment and Apples iPhone 5 is expected to incorporate the necessary technology to make this possible.

Nevertheless, in absence of the proper awareness and education programmes coming from card issuers, mobile

phone operators and handset manufacturers, British consumers are likely remain hesitant to use their mobile

phones for online payment. On top of this, Britons are likely to become more concerned about security issues,

which often happens when new technologies are introduced.

Future Impact

Mobile commerce is expected to grow very rapidly in the UK over the forecast period. The penetration of

mobile phones, particularly 3G and now 4G phones, is increasing in the UK. Furthermore, the number ofcompanies which support the purchase of goods through mobile phones is expanding. Though paying via mobile

phone bill is popular in many Asian countries, mainstream usage is still quite slow in Europe and North

America. As mobile payments and other alternative payment methods grow, it will be at the expense of

traditional payment methods such as cash and credit and debit cards. This will remain a threat to traditional

consumer payments in the future.

New Regulations for Issuers of Credit Cards and Store Cards

The British Government was very active during the first half of 2010, designing new measures to bring a new,

more responsible culture of credit card lending and borrowing to the UK. In the lead up to the general election

which was held in the UK during May 2010, the Department for Business, Innovation and Skills published thegovernments response to a consultation paper published on the regulation of credit and store cards in March

2010. At the end of March 2010, the Office of Fair Trading also published its Irresponsible Lending Guidance.On top of this, the Consumer Credit Directive, adopted by the European Council in 2008, will also come into


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force in early 2011. With these three measures, the Government intends to restore consumers and taxpayers

trust in financial services.

Current Impact

From January 2011, British credit and store card holders will have five new rights. These have been summarised

as the right to repay, control, reject, and compare credit agreements as well as the right to information. These

measures are designed to protect consumers against practices they feel to be unfair and misleading. As the

card companies agreed voluntarily to follow these new guidelines, British consumers will not have to wait forlegislation to be passed to benefit from them. 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. 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. The timeframe

within which consumers are able to reject changes in their cards interest rates has been increased from 30 to 60

days. Credit card companies will have also a duty to offer clear advice on the consequences of cardholdersmeeting only minimal repayment schedules. Last but not least, new repayment options will be introduced.

Currently, card holders are offered only two possibilities when setting up automatic repayments: the minimum

possible amount or the whole outstanding balance. From January 2011, consumers will be able to set up

automatic payments to regularly pay a fixed amount, although this will still need to at least meet minimumrepayment requirements.

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. 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. As such, all of new

measures are expected to be welcome by British financial cardholders.

Although financial card companies have agreed voluntarily to follow the new guidelines, legislation is likely to

be passed if the new Government feels the companies are not fully implementing the measures.

Future Impact

These new lending conditions will be more positive for consumers, although they will in reality be less

favourable for the banks and lenders. British consumers are expected to make full use of their new rights and

become more active in maximising the scope of the new regulations. 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, British banks are also likely to become more selective when approving potential borrowers.

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. Banks are also expected to charge

higher APRs in order to compensate for the subsequent loss of income. 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 theCredit Card Accountability Responsibility and Disclosure Act (CARD) in May 2009.

However, one negative aspect of the imposition of these new guidelines and regulations is that free banking, one

of the most remarkable characteristics of the British banking systems, is likely to come to an end. Store card and

credit card companies are expected to start charging annual fees per card in order to increase their revenues from

British consumers.

Contactless Cards Slowly Become More Popular in the UK

Contactless cards are based on the concept of near field communication (NFC), a wireless technology which can

be used within four metres of the relevant terminal. The first contactless cards were introduced into the UK in2003 when Transport for Londons Oyster card was launched. The Oyster is used across the London

transportation network, especially on buses and the London Underground. By 2009, almost seven million Oyster


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cards were in circulation in London, suggesting that a significant proportion of British consumers were familiar

with this new technology.

Contactless cards only need to be tapped in proximity to the card reader, allowing a quicker transaction for the

consumer and the merchant. 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.

As both consumers and merchants are looking for quicker ways to process micropayments, contactless cards are

becoming increasingly accepted an increasing number of merchants, especially in London.

Current Impact

British consumers, 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 capitals public transportation network. The number of contactless cards in circulation in the UK in2010 was 18 million. This was the result of a 30% increase from 2009, which was made possible by mainstream

banks issuing contactless cards to their customers en masse.

In late 2007, Barclays was the first mainstream bank to launch a contactless debit card in the UK, theBarclaycard One Pulse. Lloyds Banking Group has also issued around 650,000 contactless debit cards under the

Halifax and Bank of Scotland brands.

Barclaycard set up a partnership with mobile phone provider Orange and MasterCard as operator and launched

the Orange Credit Card. This new card also includes contactless payment technology that allows contactless

payments for amounts up to 15.

Contactless payment is accepted mainly by fast food outlets such as Yo Sushi, Prt A Manger and Eat, where

customers tend to spend only minimal amounts of money per transaction.

Outlook

Other forms of contactless payments which are not directly related to financial cards are likely to be introducedin the UK over the forecast period. Some manufacturers of mobile phone handsets will include contactless

payment in new devices which are set to be launched over the forecast period. The new iPhone 5, which is

rumoured to be launched during summer 2011, is expected to have contactless payment technology in-built.

Other mobile phones manufacturers will likely follow Apples lead and also include contactless payment

technology in their new handsets over the forecast period.

Contactless payment stickers could also become popular in the UK over the forecast period. These have

embedded chips which allow them to be attached to a wide range of devices from mobile phones to identity

cards.

Future Impact

Lloyds Banking Group is planning to launch contactless cards under its LTSB brand in 2011. The same path isexpected to be followed by players such as Nationwide Building Society, Co-operative Bank and HSBC. These

banks are likely to issue contactless cards for their customers over the forecast period.

Discover Financial Services Inc, the global brand owner of Diners Club charge cards, is expected to introduce in

the UK its new contactless sticker at one point during the forecast period. This sticker will feature its new Zip

application and can be attached to mobile phones or other devices. The Zip application, enables consumers to

make payments as they would with any tap and go card, where Zip payments will be accepted.

Regarding retailers accepting contactless payments, the largest grocery retailer in the UK, Tesco, is launching a

contactless payment pilot scheme at some of its outlets. If successful, it could be expanded cross country,

substantially increasing the number of contactless transactions in the UK.

MARKET INDICATORS


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Table 1 Number of POS Terminals 2005-2010

'000 Units2005 2006 2007 2008 2009 2010

No of POS terminals 974.0 1,023.2 1,050.8 1,095.0 1,128.7 1,154.6Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade

interviews, trade sources

Table 2 Number of ATMs 2005-2010

'000 Units2005 2006 2007 2008 2009 2010

No of ATMs 58.3 60.5 63.5 63.9 62.2 63.1Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 3 Value Lost to Fraud 2005-2010

million2005 2006 2007 2008 2009 2010

Counterfeit Cards 96.8 98.6 144.3 169.7 183.6 196.8Card Stolen or Lost 89.0 68.5 56.2 54.1 51.7 50.4Card not Present 183.2 212.6 290.5 328.4 369.0 409.2Card Lost or Stolen in 40.0 15.4 10.2 10.3 9.5 8.8

the PostID Fraud 30.5 31.9 34.1 47.5 53.3 59.8

Others - - - - - -Value Lost to Fraud 439.5 427.0 535.3 610.0 667.1 725.0Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 4 Card Expenditure by Location 2010

% value analysisCard holder Card holder Total

present not present

Charge Card Transactions 80.4 19.6 100.0Credit Card Transactions 78.3 21.6 100.0Debit Transactions 90.9 9.1 100.0Open Loop Pre-Paid Card Transactions 75.8 24.1 100.0Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 5 Card Expenditure by Category 2010

% value analysisClothing Food, House- Leisure Opera- Transport

and beve- hold and rec- tion offootwear rages, goods reation personal

tobacco and transport

services

Charge Card Transactions 4.7 13.4 10.3 9.9 17.3 15.4


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Credit Card Transactions 4.9 16.3 12.1 12.9 8.8 18.1Debit Transactions 4.1 21.8 5.6 6.4 6.9 10.1Open Loop Pre-Paid Card 5.8 25.2 6.6 6.9 15.6 5.6

Transactions

Other Total

Charge Card Transactions 29.0 100.0Credit Card Transactions 27.0 100.0Debit Transactions 45.2 100.0Open Loop Pre-Paid Card 34.3 100.0

TransactionsSource: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 6 Financial Cards in Circulation by Type: % Number of Cards 2005-2010

% number of cards2005 2006 2007 2008 2009 2010

Contact Smart Cards 57.3 72.4 78.3 80.8 81.2 83.6Contactless Smart Cards 1.1 1.8 2.4 2.6 6.2 7.9Other Cards 41.6 25.7 19.3 16.5 12.6 8.5Total 100.0 100.0 100.0 100.0 100.0 100.0Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 7 Domestic versus Foreign Spend 2010

% value analysisDomestic Foreign Total

- Charge Card Transactions 94.9 5.1 100.0- Credit Card Transactions 90.3 9.6 100.0- Debit Transactions 98.2 1.8 100.0-- Open Loop Pre-Paid Card Transactions 95.4 4.6 100.0Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


MARKET DATA

Table 8 Consumer Payments: Value 2005-2010

bn2005 2006 2007 2008 2009 2010

Card Payment 292.4 318.0 351.6 377.9 387.4 417.2Transactions (ExclCommercial)

Electronic Direct/ACH 74.6 80.5 86.6 94.3 95.3 93.7Transactions

Paper Payment 325.3 322.5 317.5 307.5 301.6 282.1Transactions

- Cash Transactions 261.0 264.0 265.0 267.1 266.2 252.3- Other Paper Payment 64.3 58.5 52.5 40.4 35.4 29.9

Types

Consumer Payment 692.3 721.0 755.8 779.7 784.3 793.0Transactions


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Source: Euromonitor International from official statistics, trade associations, trade press, company research, tradeinterviews, trade sources

Table 9 Consumer Payments: Number of Transactions 2005-2010

Million transactions2005 2006 2007 2008 2009 2010

Card Payment 5,997.9 6,354.2 6,836.3 7,454.6 8,072.5 8,668.3Transactions (ExclCommercial)

Electronic Direct/ACH 3,034.0 3,177.0 3,319.0 3,443.0 3,497.7 3,513.8Transactions

Paper Payment 25,199.0 24,179.0 23,394.0 23,331.5 21,898.4 20,376.7Transactions

- Cash Transactions 23,968.0 23,069.0 22,408.0 22,569.0 21,243.4 19,849.9- Other Paper Payment 1,231.0 1,110.0 986.0 762.5 655.0 526.9

TypesConsumer Payment 34,230.9 33,710.2 33,549.3 34,229.0 33,468.7 32,558.9



Table 10 Financial Cards: Number of Cards in Circulation 2005-2010

'000 cards2005 2006 2007 2008 2009 2010

ATM Function 164,987.7 164,718.7 165,151.0 168,365.2 162,539.7 159,987.9Charge Card Function 4,845.6 4,957.2 5,544.2 6,220.6 5,760.3 5,428.8Credit Function 69,927.4 69,437.8 67,231.1 66,014.0 58,303.7 55,894.3

Debit Function 66,991.0 68,348.0 71,624.0 76,271.0 80,313.9 83,871.8Pre-Paid Function 8,600.0 16,454.0 26,990.0 38,908.3 50,942.0 62,210.8Store Cards 17,875.0 15,934.0 15,637.0 14,800.5 12,947.5 10,799.5Financial Cards in 191,579.1 199,504.4 207,817.6 221,084.6 228,490.9 235,094.3

CirculationSource: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 11 Financial Cards Transactions: Value 2005-2010

bn2005 2006 2007 2008 2009 2010

ATM Transactions 172.2 179.9 186.9 192.2 192.8 202.4Card Payment Transactions 316.1 344.8 380.9 407.4 413.1 442.5- Charge Card 26.4 30.2 33.3 33.4 28.7 28.1

Transactions- Credit Card 106.9 105.0 109.7 113.6 107.8 110.1

Transactions- Debit Transactions 176.5 202.3 228.8 249.8 264.2 290.6- Pre-Paid Transactions 2.5 3.9 6.0 7.8 10.0 11.6- Store Card Transactions 3.8 3.4 3.0 2.9 2.5 2.1Total Cards Transactions 488.2 524.7 567.8 599.7 605.9 644.9Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 12 Financial Cards: Number of Transactions 2005-2010


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ATM Transactions 2,687.5 2,758.7 2,824.7 2,876.0 2,921.8 2,910.1- Charge Card 247.3 268.8 279.5 294.3 298.0 301.4

Transactions

- Credit Card 1,675.2 1,669.2 1,681.2 1,810.5 1,866.4 1,937.3Transactions

- Debit Transactions 4,178.9 4,518.9 4,938.5 5,384.6 5,893.1 6,354.2- Pre-Paid Transactions 32.8 66.2 119.8 170.1 233.9 308.2- Store Card Transactions 83.4 67.9 61.1 55.6 46.1 36.2Total Cards Transactions 8,905.1 9,349.7 9,904.8 10,591.0 11,259.3 11,847.4Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 13 Financial Cards: Number of Accounts 2005-2010

'000 accounts2005 2006 2007 2008 2009 2010

Charge Card Function 3,390.0 3,550.0 4,180.0 4,243.0 4,120.3 3,960.8Credit Function 31,600.0 31,400.0 30,800.0 30,202.5 30,350.5 30,742.0Debit Function 40,800.0 41,000.0 41,700.0 42,100.0 43,102.0 44,961.8Store Cards 16,400.0 13,400.0 13,200.0 12,650.0 11,391.3 9,377.3Financial Cards in 92,190.0 89,350.0 89,880.0 89,195.5 88,964.0 89,041.9



Table 14 Financial Cards: Number of Cards by Issuer 2005-2009

'000 cardsCompany 2005 2006 2007 2008 2009

Barclays Group Plc 24,871.1 24,331.4 23,810.4 23,843.1 23,959.8Royal Bank of Scotland 26,149.8 24,957.1 23,456.4 23,891.8 22,866.9

GroupLloyds TSB Group Plc 18,363.2 18,363.4 19,567.3 20,176.7 19,844.5Bank of Scotland plc 13,367.1 13,801.3 14,961.1 16,370.9 15,731.3HSBC Bank Plc 13,727.4 14,299.1 14,344.9 14,690.4 15,031.5Abbey National Plc 6,469.4 6,600.9 6,664.6 7,001.3 7,349.3Transport for London 3,641.0 4,954.0 5,841.0 6,515.0 6,683.0MBNA America Bank NA 6,830.9 6,017.2 6,624.9 6,552.5 6,163.0

(MBNA)Nationwide Building 4,089.1 4,831.3 5,039.5 5,255.8 5,362.3

SocietySantander UK plc - - - - 5,211.4Marks & Spencer 4,355.8 5,144.4 5,062.9 4,907.0 4,570.1

Financial Services PlcClydesdale Bank Plc 3,210.4 3,418.3 3,669.4 3,904.5 4,102.0Capital One Bank 4,104.4 3,882.4 3,554.8 3,513.0 3,364.7

(Europe) PlcAmerican Express Co 2,059.3 2,138.4 2,565.2 2,858.4 2,921.0Co-operative Bank, The 2,518.9 2,285.4 2,388.7 2,456.3 2,540.5Tesco Personal Finance 2,110.4 2,269.0 2,350.9 2,472.8 2,497.0

PlcLaSer UK - - 2,815.0 2,593.0 2,324.1First Direct 1,955.5 2,081.4 1,959.8 2,124.7 2,264.5Alliance & Leicester Plc 1,557.7 2,050.4 2,090.0 2,181.4 2,256.8Citigroup Inc 1,714.2 1,872.3 2,076.2 2,018.6 1,841.6

J Sainsbury Plc 982.0 968.2 861.9 881.7 867.3Home Retail Group - 1,068.0 1,125.0 1,031.6 861.0


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Ikano Financial 755.6 673.5 696.0 674.9 783.3Services Ltd

John Lewis Partnership 1,030.4 918.4 883.5 845.1 757.4Plc

National Grid plc 600.0 630.0 620.0 605.0 595.0Diners Club UK Ltd 307.7 331.9 401.2 541.0 564.8

GE Capital Bank Ltd 7,548.3 6,591.3 6,455.8 6,016.4 -Creation Financial 3,068.7 2,735.5 - - -

Services LtdGUS plc 1,044.0 - - - -Transco Metering - - - - -

Services LtdOthers 35,147.0 42,289.8 47,931.0 57,161.7 67,176.7Total 191,579.1 199,504.4 207,817.6 221,084.6 228,490.9Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 15 Financial Cards: Number of Cards by Operator 2005-2009

'000 cardsCompany 2005 2006 2007 2008 2009

Visa Europe 85,345.3 82,378.9 78,311.3 78,285.3 77,361.2MasterCard 54,380.7 58,925.1 65,288.3 69,653.9 67,686.5

International IncTransport for London 3,641.0 4,954.0 5,841.0 6,515.0 6,683.0American Express Co 2,230.3 2,307.0 2,898.5 3,499.0 3,713.4National Grid plc 600.0 630.0 645.0 605.0 595.0Diners Club UK Ltd 307.7 331.9 401.2 421.2 395.4Transco Metering - - - - -

Services LtdOthers 45,074.1 49,977.5 54,432.3 62,105.2 72,056.3Total 191,579.1 199,504.4 207,817.6 221,084.6 228,490.9

Source: Euromonitor International from official statistics, trade associations, trade press, company research, tradeinterviews, trade sources

Table 16 Financial Cards: Card Payment Transaction Value by Operator 2005-2009

millionCompany 2005 2006 2007 2008 2009

Visa Europe 177,523.0 190,211.1 207,067.3 224,517.3 231,609.2MasterCard 122,039.9 134,955.8 150,909.0 157,582.6 158,520.5

International IncAmerican Express Co 9,368.6 11,576.8 13,975.9 15,376.8 11,997.8

Transport for London 1,250.0 1,650.0 1,866.0 2,086.0 2,485.8Diners Club UK Ltd 1,170.2 1,456.2 1,643.7 1,708.6 1,507.9National Grid plc 624.0 671.0 675.8 671.5 634.1Transco Metering - - - - -

Services LtdOthers 4,093.0 4,236.3 4,742.0 5,479.0 6,335.6Total 316,068.7 344,757.2 380,879.8 407,421.8 413,091.0Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 17 Financial Cards: Card Payment Transaction Value by Issuer 2005-2009

million

Company 2005 2006 2007 2008 2009

Royal Bank of Scotland 53,961.2 59,169.0 59,580.0 60,696.0 60,439.8


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GroupLloyds TSB Group Plc 44,707.4 48,995.4 53,744.9 56,781.6 56,411.2Barclays Group Plc 38,694.4 41,881.0 44,863.8 49,900.9 52,685.1HSBC Bank Plc 27,686.0 33,188.7 36,169.2 38,108.2 40,395.1Bank of Scotland plc 32,324.4 33,592.5 37,099.2 39,356.7 37,673.7Abbey National Plc 12,394.4 14,543.0 16,364.7 18,182.2 18,426.5

Nationwide Building 9,575.2 11,286.1 13,091.0 14,201.7 14,270.5Society

American Express Co 9,368.6 11,576.8 13,975.9 15,376.8 11,997.8Clydesdale Bank Plc 6,738.4 7,725.7 8,447.6 9,396.0 10,023.3MBNA America Bank NA 10,450.1 9,115.4 10,825.3 10,467.6 9,152.0

(MBNA)Tesco Personal Finance 4,551.5 5,252.4 6,725.7 7,945.3 7,379.5

PlcFirst Direct 4,972.5 5,206.6 5,738.2 6,717.9 7,215.0Co-operative Bank, The 3,531.7 4,101.2 4,349.3 5,206.7 6,145.7Alliance & Leicester Plc 4,112.0 4,633.3 5,056.2 5,445.0 6,103.1Capital One Bank 6,264.5 5,858.5 5,797.6 6,034.5 5,656.0

(Europe) PlcCitigroup Inc 4,587.0 4,910.0 5,529.9 5,544.5 5,063.0Marks & Spencer 3,719.9 4,775.6 5,643.4 5,078.4 4,388.2

Financial Services PlcTransport for London 1,250.0 1,650.0 1,866.0 2,086.0 2,485.8Newcastle Building 253.0 555.2 1,267.0 1,727.3 1,948.6

SocietyDiners Club UK Ltd 1,275.2 1,544.5 1,800.0 1,812.0 1,888.2J Sainsbury Plc 1,711.7 1,668.2 1,621.6 1,746.0 1,640.7Santander UK plc - - - - 937.0National Grid plc 624.0 671.0 675.8 671.5 634.1LaSer UK - - 486.7 455.2 403.2John Lewis Partnership 293.7 262.5 234.2 211.9 191.6

PlcGE Capital Bank Ltd 1,475.9 1,292.5 1,165.1 1,090.8 -Creation Financial 571.2 510.6 - - -

Services Ltd

Transco Metering - - - - -Services Ltd

Others 30,974.9 30,791.2 38,761.3 43,180.9 49,536.3Total 316,068.7 344,757.2 380,879.8 407,421.8 413,091.0Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 18 Consumer Payments Forecast: Value 2010-2015

bn2010 2011 2012 2013 2014 2015

Card Payment 417.2 442.1 476.0 507.7 536.3 553.7Transactions (ExclCommercial)

Electronic Direct/ACH 93.7 93.1 97.8 106.1 117.1 133.1Transactions

Paper Payment 282.1 260.0 238.1 221.6 210.9 202.9Transactions

- Cash Transactions 252.3 235.9 221.0 210.2 204.3 200.0- Other Paper Payment 29.9 24.2 17.2 11.4 6.6 3.0

TypesConsumer Payment 793.0 795.3 811.9 835.4 864.2 889.8



Table 19 Consumer Payments Forecast: Number of Transactions 2010-2015


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Card Payment 8,668.3 9,194.6 9,845.7 10,348.3 10,750.6 11,022.0Transactions (Excl

Commercial)Electronic Direct/ACH 3,513.8 3,579.5 3,696.2 3,898.4 4,131.2 4,421.6

TransactionsPaper Payment 20,376.7 19,068.8 18,059.1 17,320.4 16,893.8 16,574.4

Transactions- Cash Transactions 19,849.9 18,662.8 17,774.5 17,138.2 16,790.2 16,528.3- Other Paper Payment 526.9 406.0 284.6 182.3 103.6 46.1

TypesConsumer Payment 32,558.9 31,842.9 31,601.0 31,567.2 31,775.6 32,017.9



Table 20 Financial Cards Forecast: Number of Cards in Circulation 2010-2015

'000 cards2010 2011 2012 2013 2014 2015

ATM Function 159,987.9 160,675.8 162,909.2 166,884.2 173,592.9 182,671.9Charge Card Function 5,428.8 5,345.0 5,374.3 5,450.4 5,534.9 5,623.5Credit Function 55,894.3 54,182.6 53,126.8 53,419.3 54,311.9 55,714.0Debit Function 83,871.8 88,593.8 94,458.7 98,444.8 101,585.2 103,647.4Pre-Paid Function 62,210.8 74,446.0 84,666.3 93,005.4 99,603.1 103,429.8Store Cards 10,799.5 9,262.7 8,272.5 7,652.1 7,237.4 7,084.7Financial Cards in 235,094.3 246,872.5 261,117.0 274,486.2 286,646.0 296,649.9



Table 21 Financial Cards Forecast: Value 2010-2015

bn2010 2011 2012 2013 2014 2015

ATM Transactions 202.4 208.6 210.7 210.6 209.1 208.3Card Payment Transactions 442.5 468.5 504.1 538.9 570.3 589.9- Charge Card 28.1 29.1 30.9 34.1 36.8 38.9

Transactions- Credit Card 110.1 112.2 115.9 117.8 121.4 122.4

Transactions- Debit Transactions 290.6 312.6 342.3 371.5 395.9 411.8- Pre-Paid Transactions 11.6 12.8 13.5 14.2 15.1 15.7- Store Card Transactions 2.1 1.7 1.5 1.3 1.2 1.0Total Cards Transactions 644.9 677.1 714.8 749.5 779.3 798.2Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 22 Financial Cards Forecast: Number of Transactions 2010-2015


ATM Transactions 2,910.1 2,870.8 2,795.3 2,696.9 2,584.8 2,504.4- Charge Card 301.4 307.6 317.0 332.0 344.5 354.9


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Transactions- Credit Card 1,937.3 2,024.7 2,132.6 2,228.3 2,301.5 2,339.0

Transactions- Debit Transactions 6,354.2 6,711.9 7,156.2 7,458.2 7,696.1 7,852.4- Pre-Paid Transactions 308.2 396.0 499.6 607.4 700.9 780.5- Store Card Transactions 36.2 29.2 24.5 20.9 18.1 15.8

Total Cards Transactions 11,847.4 12,340.1 12,925.2 13,343.7 13,645.8 13,846.8Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade


Table 23 Financial Cards Forecast: Number of Accounts 2010-2015

'000 accounts2010 2011 2012 2013 2014 2015

Charge Card Function 3,960.8 3,958.4 4,064.5 4,251.4 4,490.9 4,808.0Credit Function 30,742.0 31,366.1 31,788.1 32,597.6 33,344.1 33,714.2Debit Function 44,961.8 47,452.7 49,616.5 51,129.8 52,162.6 52,585.1Store Cards 9,377.3 8,228.6 7,442.0 6,955.3 6,615.1 6,483.5Financial Cards in 89,041.9 91,005.7 92,911.0 94,934.1 96,612.7 97,590.9



DEFINITIONS

This report analyses the market for Financial Cards and Payments in the UK. For the purposes of the study, 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, cash dispenser card or cash machine card) enables access to an ATM

machine in order to receive cash or monitor account activity. Functionality is limited to withdrawals and

services available via an ATM machine.

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). A debit card allows the cardholder to receive cash and monitor account activity at

an ATM machine, as well as pay for goods and services. A debit card transaction involves the automaticwithdrawal of funds from the cardholders demand deposit bank account (checking or giro). Since the funds are

removed from a bank account, no interest is charged on payments.

Credit Function

Credit cards allow for purchases against a preapproved line of credit. The account holder has the choice ofwhether to pay off the entire balance or opt for monthly installments with the balance serving as revolving

credit. Credit cards can include affinity cards, reward cards and types of co-branded cards. Co-branded retailer


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cardsissued by retailers acting as financial institutions and without usage restrictionsare included in this

category. Cards issued by a retailer with usage limited to a specific store within a predefined retail group fall

under the store cards definition. Debit cards with an overdraft function are not counted as cards with a creditfunction.

Commercial Credit CardsA commercial card is issued to a business for use in paying expenses such as travel and entertainment and

supplies. Commercial credit cards provide companies with a revolving line of credit. Commercial cards allow

employers to closely monitor how employees allocate company funds. The card statements also provide

companies with a record-keeping benefit. Types of commercial credit cards may include small business,

corporate, fleet and purchasing.

Charge Card Function

A charge card shares the pay later component with credit cards. However, charge card balances normally have

to be paid off in full monthly and do not attract interest charges. Charge cards do not offer a revolving creditfacility.

Commercial Charge Cards

A commercial card is issued to a business for use in paying expenses such as travel and entertainment and

supplies. Commercial cards allow employers to closely monitor how employees allocate company funds. The

card statements also provide companies with a record-keeping benefit. Types of commercial charge cards may

include small business, corporate, fleet and purchasing.

Open Loop Pre-paid Function

The open loop pre-paid card/function category contains General-Purpose Reloadable (including electronic

purses), Payroll, Travel, Remittance, Network Branded Gift, Insurance, Government Benefits, Healthcare, andEmployee Benefits cards. 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.

Closed Loop Pre-paid Function

The closed loop pre-paid card/ function category includes Merchant Issued Gift, Transportation, Parking and

Toll. Usage of these types of cards is restricted to a closed network of pre-defined acceptance points and

locations. Note: This category does not include phone cards.

Store Cards

A store card (also known as a retailer or private label card) contains a pay later component similar to credit

cards. However, store cards must contain usage limited to purchases at specific stores within a predefined retail

group. Credit cards issued by retailers acting as financial institutions and without usage restrictions fall into thecredit card category.

Pre-paid

General-Purpose Reloadable

Sometimes known as e-purses or e-wallets, 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. They can be loaded and re-

loaded with funds and used to make purchases at a POS terminal; some, but not all general purpose reloadable

cards can be used to withdraw funds at an ATM. They can be either network-branded cards or a chip that is

attached to another type

financial cards and payments in uk

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