Credit Cards in the UK - 2006

Growth in consumer credit has been one of the most important and controversial forces behind the UK economy’s sustained economic expansion during the past decade, and credit cards have been at the leading edge of this development. Praised by some for democratising credit by making it more readily accessible to the mass market but demonised by others for luring consumers into record levels of debt that may ultimately prove unsustainable, credit card companies are coming under increasing media and regulatory scrutiny.

During the period 2000-2005, the value of transactions conducted using plastic cards grew from £171.2 billion in to an estimated £347.2 billion ($613.5 billion). The average annual growth rate was 15.3%, with the market expanding by an estimated 12.4% in 2005. This growth has been driven by a number of factors, namely the number of transactions using plastic cards, an increasing average value of transactions, and the number of cards in issue.

The top five players in the plastic card market are estimated to have accounted for accounted for 84.3% of spending on credit cards in 2004. These banks are commonly referred to as the UK’s “Big Five” retail banks.

There are two major challenges to the dominance of the banks. Powerful US brands such as MBNA and Capital One have been making aggressive efforts to penetrate the UK market in recent years, while supermarket own brand offerings, such as the those offered by Sainsbury’s Bank (a joint venture between Sainsbury’s and HBOS) and Tesco Personal Finance (a joint venture between Tesco and RBS) utilise their retail networks and brands to issue credit cards.

ODS believes that these factors, together with the growth of e-commerce, rising debt levels and bankruptcy rates, changing fee structures, the maturation of security technology and nascent threats from rival payment systems create a level of uncertainty in the industry that warrants detailed examination.

Credit Cards in the UK - 2006 aims to document the development of the UK Credit Card market, estimate its size, analyse its structure and segmentation, profile its major players, outline current trends, evaluate competitive threats, assess likely future developments and forecast growth rates.