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Payments Landscape in Luxembourg: Opportunities and Risks to 2022

Payments Landscape in Luxembourg: Opportunities and Risks to 2022

Summary

Luxembourg’s payment card market is mature, with a high penetration rate of 4.6 cards per inhabitant. Cards are the preferred payment instrument in the country, accounting for 54.1% of total consumer payment transaction volume in 2018. Improved payment infrastructure, high awareness of payment cards, enhanced security, and the growing adoption of contactless payments will support this growth.

Debit cards are widely used for low-value debit card payments. Debit card penetration in the country stands at 1.3 cards per individual, supported by a strong adult banked population, which stood at 99.2% in 2018. Additionally, the entry of digital-only banks such as N26 and Ferratum Bank has supported debit card market growth. The frequency of debit card payments is progressively on the rise, registering a healthy review-period compound annual growth rate (CAGR) of 5.5% - up from 78.1 times a year in 2014 to 96.9 times in 2018.

Credit card penetration is high in Luxembourg, with each individual holding three cards as of 2018. Consumers are also avid users of credit cards, which accounted for 61.8% of total card payment value in 2018. This is supported by banks offering credit cards alongside banking packages, as well as rising disposable income and household consumption in the country. Rising adoption of contactless technology contributed to the growth of payment card transaction volume and value during the review period. And with a growing number of retailers accepting contactless payments, this trend will further drive payment card transaction values and volumes over the forecast period (2018e-22f).

E-commerce in Luxembourg grew from €535.0m ($612.9m) in 2014 to €810.5m ($928.5m) in 2018 at a review-period CAGR of 10.9%. The growth was supported by growing interest in online shopping, government initiatives, and an increasing number of online merchants.

The report Payments Landscape in Luxembourg: Opportunities and Risks to 2022, provides detailed analysis of market trends in Luxembourg's cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cash, cards, credit transfers, direct debit, and cheques during the review-period (2014-18e). The report also analyzes various payment card markets operating in the industry and provides detailed information on the number of cards in circulation, transaction values and volumes during the review-period and over the forecast-period (2018e-22f). It also offers information on the country's competitive landscape, including market shares of issuers and schemes. The report brings together research, modeling, and analysis expertise to allow banks and card issuers to identify segment dynamics and competitive advantages. The report also covers detailed regulatory policies and recent changes in regulatory structure.

The report provides -

  • Current and forecast values for each market in Luxembourg's cards and payments industry, including debit and credit cards
  • Detailed insights into payment instruments including cash, cards, credit transfers, direct debit, and cheques. It also, includes an overview of the country's key alternative payment instruments
  • E-commerce market analysis
  • Analysis of various market drivers and regulations governing Luxembourg's cards and payments industry
  • Detailed analysis of strategies adopted by banks and other institutions to market debit and credit cards
Companies mentioned: Banque Centrale du Luxembourg, Banque et Caisse d’Epargne de l’Etat, BNP Paribas, Banque Internationale à Luxembourg, Banque de Luxembourg, Mastercard, and Visa

Scope
  • Banks are increasingly focusing on providing innovative services to improve the customer experience. In 2017, Banque et Caisse d’Epargne de l’Etat (BCEE) introduced the concept of movable bank branches. This enables customers to perform banking transactions such as deposits and ATM cash withdrawals. Banks are also focusing on enhancing their digital product portfolio. In April 2018, Banque Internationale à Luxembourg (BIL) enabled its users to open bank accounts digitally using the BILnet app, and to verify themselves by showing proof of identity via video chat.
  • The emergence of contactless technology will further boost card-based payments in Luxembourg. Contactless payments were first introduced in Luxembourg by Visa in February 2016 with the launch of Visa payWave. All of the major banks now offer contactless cards. Meanwhile, banks and payment companies are focusing on increasing the acceptance of these cards by encouraging merchants to adopt contactless point of sale (POS) terminals. According to Visa Europe there are 7,000 contactless POS terminals in Luxembourg that accept contactless cards, which accounts for over half of total POS terminals in the country.
  • To promote e-commerce among the country’s merchants, in September 2018 the Ministry of the Economy launched national e-commerce marketplace LetzShop, enabling Luxembourg’s merchants to sell their goods online. To drive adoption, the marketplace charges no commission on transactions - just a flat annual fee of €500 ($572.77). During its launch the website featured around 100 shops with over 350,000 items for sale. Increasing e-commerce activity is expected to further drive electronic payments.
Reasons to buy
  • Make strategic business decisions, using top-level historic and forecast market data, related to Luxembourg's cards and payments industry and each market within it.
  • Understand the key market trends and growth opportunities in Luxembourg's cards and payments industry.
  • Assess the competitive dynamics in Luxembourg's cards and payments industry.
  • Gain insights into marketing strategies used for various card types in Luxembourg.
  • Gain insights into key regulations governing Luxembourg's cards and payments industry.


Market Overview
Executive Summary
Card-based Payments
E-commerce Payments
Alternative Payments
Payment Innovations
Payments Infrastructure & Regulation
Appendix

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