Introduction
 
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.
 

 
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 Datamonitor's 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
 
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 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 Purchase
 
Access data from Datamonitor's 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 Datamonitor's Cards and Payments Team on the tactics issuers should employ to capture a greater share of this market

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