Payment Metrics: Consumer Attitudes towards and Usage of Traditional and Emerging Means of Payment in the UK

NEW YORK, April 26, 2012 /PRNewswire/ -- Reportlinker.com announces that a new market research report is available in its catalogue:

Payment Metrics: Consumer Attitudes towards and Usage of Traditional and Emerging Means of Payment in the UK

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Payment Metrics: Consumer Attitudes towards and Usage of Traditional and Emerging Means of Payment in the UK is a study about the way in which consumers currently pay for different products and services and how this is likely to change in future. It covers both established payment means, including different types of payment card, and payment methods that seem set for rapid growth in future, most notably mobile and contactless payments. In addition, consumer behaviour is analysed in the fields of specialised online payments and domestic / international remittances, and the research also addresses two areas that are central to consumers' choice of payment means: loyalty programs; and insurance and assistance policies linked to added value accounts and payment cards. The report examines how consumers state that they are most likely to pay for small, medium-sized and large irregular purchases at present and also how they report paying for common services that require recurring payments (e.g. cable / satellite TV, electricity, gas or water bills, flat or house rental, travel season tickets etc.). In both cases, it quantifies usage of the following payment means: cash; cheques or postal orders; debit cards; credit or charge cards; rechargeable prepaid cards; and any other means (e.g. mobile or online payments not involving debit, credit or charge cards). Also, for regular payments, it takes into consideration direct debits, standing orders and bank transfers, and distinguishes between rechargeable prepaid cards with multiple usage functions and those usable for one particular service only. You may be able to use this report in one or more of the following ways: - gain access to a complete 'tool kit' for organisations with an interest in payments to understand the current behaviour of UK consumers in this huge and diverse sector; - know exactly which types of card are held most widely by consumers and which they report using most often - for example, how does frequency of usage of the many different types of affinity and co-branded card compare to that of regular cards and what differences in utilisation are visible when cards are analysed by function, brand, status and target? - appreciate the extent to which UK consumers are ready to embrace future opportunities to make payments using their mobile phone (and, possibly, other devices such as wristwatches); - understand the typical member profile of the UK's main loyalty programs and the extent to which each has engaged its members to actually make use of it; - evaluate which forms of insurance and assistance are most likely to enhance the appeal of payment products and which are most likely to be used by consumers in the form of claims or calls for assistance.

Executive SummaryIntroductionPayment TypesPayment CardsLoyalty ProgramsInsurance and AssistanceMobile / Contactless PaymentsOnline PaymentsDomestic / International RemittancesAppendix

List of Graphics / Tables

0.0 EXECUTIVE SUMMARY A fairly high proportion of respondents are aware of the potential to use mobile phones to make payments... ... although a majority are not currently favourable towards the concept... ... and lack of enthusiasm is especially apparent among female and older customers Credit or charge cards are used more frequently for payment as size of transaction increases For recurring transactions, one payment means is dominant in all but one purchase category Numerous organisations have a fundamental interest in the evolving consumer payments market

1.0 INTRODUCTION

Scope and rationale

Consumers are changing the ways in which they pay for products and services...

... which has important implications for a wide range of different organisations...

... and is already visible from trends in the payments market in recent years

Finaccord

Payment Metrics and other consumer research studies focused on the UK

UK affinity and partnership marketing publications

2.0 PAYMENT TYPESIntroduction Payment methods for irregular purchases Low-value purchases (up to £15.00) Cash remains king for low-value irregular purchases with a value of up to £15.00... Medium-value purchases (£15.00 - £50.00) ... but is relegated behind debit, credit and charge cards for medium-value purchases High-value purchases (£50.00 or more) As a primary means of payment, rechargeable prepaid cards have made little headway in any category Payment method preferences by age group Age group variances are determined primarily by orientation to particular purchase value brackets Payment methods for recurring purchases Over 50% of respondents make recurring payments across seven categories of expenditure Direct debits, standing orders and other bank transfers are dominant in the majority of cases Online payment set-up is used most commonly for all categories needing recurring payments

3.0 PAYMENT CARDS

Introduction

Cards in circulation

Overview

Almost all respondents possess a debit card and well over half a credit, charge or store card

Debit cards

It is likely that over three quarters of debit cards issued carry the Visa marque...

Credit, charge and store cards

... although MasterCard has a narrow lead in the credit card sector

The survey results suggest that approaching 30% of cards are likely to be higher status products...

... with American Express likely to hold a higher market share in the gold and platinum categories

As a percentage of its total card portfolio, business cards are particularly important to American Express...

... meaning that its market share of cards issued in this segment is likely to be higher than that of Visa

MasterCard appears to be substantially stronger than Visa in the market for co-branded cards...

... although the opposite applies in the much smaller market for affinity cards

Supermarkets and other retailers constitute the two most important specific co-branding segments

The co-branding portfolios of the three main payment brands display substantial differences in make-up

The influence of the three payment networks is most even in the hotel chain co-branding segment

In the affinity credit card market, the segment of charity cards is the largest

In the market for football club credit cards, the results suggest a three to one weighting in favour of Visa

Rechargeable prepaid cards

In the market for prepaid cards, the results suggest that MasterCard is well ahead of Visa

Around one third of rechargeable prepaid cards in circulation are either affinity or co-branded products

Once again, MasterCard and Visa appear to have contrasting areas of strength

Many co-branded rechargeable prepaid cards carry brand names created specifically for them

MasterCard is dominant in the key co-branding segment of 'other organisations'

Charity cards are the most common type of rechargeable prepaid affinity card

Both MasterCard and Visa are active in the market for affinity rechargeable prepaid cards

Card utilisation frequency

Respondents are most likely to report a debit card as their main one

Utilisation rates for Visa debit cards are higher than those for MasterCard / Maestro products...

... although the reverse holds true for credit cards

For rechargeable prepaid cards, the utilisation gap between the two main payment brands is narrower

Although not widely held, ultra high status cards enjoy very high utilisation rates among those that do...

... with a similar assertion applying in the case of business cards, which are rarely left dormant

Among co-branded cards, consumers use retailer or supermarket cards most often as their main ones...

... with charity cards recording a particularly strong performance among types of affinity card

Across all card categories, charity and ultra high status cards record the highest utilisation rates

4.0 LOYALTY PROGRAMSIntroduction Membership and utilisation Over 60% of respondents report that they are members of a loyalty program of one sort or another Loyalty program members are most likely to be female, aged from 55 to 64 and with a high annual income Three loyalty programs are dominant in terms of their total number of members... ... although two others also claim more than 10% of respondents as members Most typically, program members are female, aged 47 and with an average annual income of £32,837... ... although substantial differences in member profiles are visible from one program to another Respondents who belong to the loyalty program of Marks & Spencer appear to be the most engaged Earning and redemption systems Cashback is comfortably the most favoured loyalty program earning system Earning and redemption opportunities across multiple different organisations are generally preferred

5.0 INSURANCE AND ASSISTANCE

Introduction

Packaged policy penetration rates

Breakdown recovery insurance is held most commonly on a packaged basis...

... as a result of rapid growth of added value accounts in recent years

Perceived value

Perceived value among respondents varies greatly by type of insurance or assistance...

... and there is often an apparent disconnect between penetration rate and perceived value

Arguably, the generic product name 'card protection insurance' would benefit from an update

Respondents with access to them are most likely to actually make use of concierge services

The survey results also point to a relatively high claims frequency for price protection insurance

Generally speaking, respondents value most what they use most albeit with some exceptions

6.0 MOBILE / CONTACTLESS PAYMENTSIntroduction Contactless card payments Less than a quarter of respondents possess a payment card with a contactless functionality... ... and many of those that do have not yet used it to make a contactless payment Men are significantly more likely to have made a contactless payment than women Mobile banking Users of mobile banking services are most likely to be young and male... ... and to be owners of an Apple iPhone Over a quarter of users of mobile banking check their account balance every day Mobile payments Almost three quarters of respondents are aware of the emerging environment for mobile payments Respondents with an Apple iPhone are most aware and those with an HTC device the least aware Respondents display mixed feelings towards the concept of using a mobile phone to make payments... ... with females markedly less enthused at the prospect than their male counterparts... ... but with owners of two makes of mobile phone displaying much more interest than the average Relatively few respondents are sure that their mobile phone is already equipped to make payments ... with some differences again visible when analysed by make of mobile phone used Consumers are most likely to look to PayPal, Amazon and Visa as providers of mobile payment solutions Most respondents would prefer mobile payments to be debited directly from their bank account... ... although some younger respondents show an interest in linking such payments to their mobile phone bill A minority of respondents would favour using a special wristwatch to make contactless payments...

7.0 ONLINE PAYMENTS

Introduction

Frequency of usage of online payment solutions

In terms of usage frequency, PayPal has overtaken direct entry of payment card details

Amazon Payments is also used quite widely but other online payment means lag behind

8.0 DOMESTIC / INTERNATIONAL REMITTANCESIntroduction OverviewAlmost twice as many respondents have a need for domestic remittances as for international remittances Domestic remittances PayPal and various types of bank payment are used on a regular basis most often Sending cash, cheques or postal orders in the post is ranked third by this measureInternational remittances Moneygram and Western Union enjoy more frequent usage in the market for international remittances...... although PayPal still appears to be dominant Market sharesPayPal's approximate market share of international remittances is similar to that for domestic remittances...... although there are some differences among the competing remittance means

9.0 APPENDIX

Research sample and mechanics

Research methodology and structure

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY Close to three quarters of respondents with a mobile phone are aware of the emerging market for mobile payments Much work remains to be done to convince consumers of the benefits of mobile payments as opposed to other payment means The market for mobile payments to 'attack' in the field of irregular transactions varies by size of purchase... ... and by sector of purchase in the case of regular, recurring payments 1.0 INTRODUCTION

2.0 PAYMENT TYPES

Segmentation of main payment methods used for low-value irregular purchases, 2012

Segmentation of payment methods for medium-value irregular purchases, 2012

Segmentation of payment methods for high-value irregular purchases, 2012

Payment method preferences for all irregular purchases by age group, 2012

Payment method preferences for all irregular purchases by age group, 2012 (table)

Frequency with which consumers make recurring payments for particular services, 2012

Segmentation of payment methods for recurring purchases split by category of purchase, 2012

Segmentation of payment methods for recurring purchases split by category of purchase, 2012 (table)

Segmentation of payment interfaces used to set up recurring purchases split by type of purchase, 2012

Segmentation of payment interfaces used to set up recurring purchases split by type of purchase, 2012 (table)

3.0 PAYMENT CARDS Percentage of respondents holding debit cards, credit / charge / store cards and rechargeable prepaid cards, 2012 Implied market share of debit cards in circulation of MasterCard / Maestro and Visa, 2012 Percentage of respondents holding American Express, Diners Club, MasterCard, Visa and private label credit, charge or store cards, 2012 Implied market share of credit, charge and store cards in circulation of American Express, Diners Club, MasterCard, Visa and private label, 2012 Credit, charge and store cards in circulation segmented by standard, gold, platinum and ultra high status and by card brand / network, 2012 Implied market share of standard, gold, platinum and ultra high status credit, charge and store cards in circulation of American Express, Diners Club, MasterCard, Visa and private label, 2012 Credit, charge and store cards in circulation segmented by standard, gold, platinum and ultra high status and by card brand / network, 2012 (table) Credit, charge and store cards in circulation segmented by consumer and business cards and by card brand / network, 2012 (table) Implied market share of consumer and business credit, charge and store cards in circulation of American Express, Diners Club, MasterCard, Visa and private label, 2012 Credit, charge and store cards in circulation segmented by consumer and business cards and by card brand / network, 2012 (table) Credit, charge and store cards in circulation segmented by mono-branded, co-branded and affinity cards and by card brand / network, 2012 (table) Implied market share of mono-branded, co-branded and affinity credit, charge and store cards in circulation of American Express, Diners Club, MasterCard, Visa and private label, 2012 Credit, charge and store cards in circulation segmented by mono-branded, co-branded and affinity cards and by card brand / network, 2012 (table) Co-branded credit cards in circulation segmented by co-brand category and by card brand / network, 2012 Implied market share, segmented by co-brand category, of co-branded credit cards in circulation of American Express, MasterCard and Visa, 2012 Co-branded credit cards in circulation segmented by co-brand category and by card brand / network, 2012 (table) Affinity credit cards in circulation segmented by affinity category and by card brand / network, 2012 (table) Implied market share, segmented by affinity category, of affinity credit cards in circulation of MasterCard and Visa, 2012 Affinity credit cards in circulation segmented by affinity category and by card brand / network, 2012 (table) Percentage of respondents holding MasterCard, Visa and private label rechargeable prepaid cards, 2012 Implied market share of rechargeable prepaid cards in circulation of MasterCard, Visa and private label, 2012 Rechargeable prepaid cards in circulation segmented by mono-branded, co-branded and affinity cards and by card brand / network, 2012 (table) Implied market share of mono-branded, co-branded and affinity rechargeable prepaid cards in circulation of MasterCard, Visa and private label, 2012 Rechargeable prepaid cards in circulation segmented by mono-branded, co-branded and affinity cards and by card brand / network, 2012 (table) Co-branded rechargeable prepaid cards in circulation segmented by co-brand category and by card brand / network, 2012 Implied market share, segmented by co-brand category, of rechargeable prepaid cards in circulation of MasterCard and Visa, 2012 Co-branded rechargeable prepaid cards in circulation segmented by co-brand category and by card brand / network, 2012 (table) Affinity rechargeable prepaid cards in circulation segmented by affinity category and by card brand / network, 2012 Implied market share, segmented by affinity category, of affinity rechargeable prepaid cards in circulation of MasterCard and Visa, 2012 Affinity rechargeable prepaid cards in circulation segmented by affinity category and by card brand / network, 2012 (table) Card utilisation frequency by card function, 2012 Card utilisation frequency by card function, 2012 (table) Card utilisation frequency by card function and brand / network, 2012 Card utilisation frequency by card function and brand / network, 2012 (table) Credit, charge and store card utilisation frequency by card status, target and type, 2012 Credit, charge and store card utilisation frequency by card status, target and type, 2012 (table) Co-branded and affinity credit and charge card utilisation frequency by co-brand and affinity type, 2012 Co-branded and affinity credit and charge card utilisation frequency by co-brand and affinity type, 2012 (table) Ranking of card categories (function, brand / network, status, target, type) by score for card utilisation frequency, 2012

4.0 LOYALTY PROGRAMS

Membership of loyalty programs by program type, 2012

Membership of loyalty programs by program type and by gender, age group and annual household income, 2012

Membership of specific loyalty programs and degree of utilisation of each among all respondents, 2012

Membership of specific loyalty programs and degree of utilisation of each among all respondents, 2012 (table)

Gender, age and annual household income profiles of respondents belonging to specific loyalty programs, 2012 (table)

Degree of utilisation of specific loyalty programs among respondents belonging to each program, 2012

Degree of utilisation of specific loyalty programs among respondents belonging to each program, 2012 (table)

Preferred loyalty program earning systems of respondents, 2012

Preference of respondents for earning and redemption opportunities across a single organisation or multiple different organisations, 2012

5.0 INSURANCE AND ASSISTANCE Penetration rates for insurance and assistance policy types linked to added value accounts and payment cards, 2012 Penetration rates for insurance and assistance policy types linked to added value accounts and payment cards, 2012 (table) Perceived value among respondents of insurance and assistance types linked to added value accounts and payment cards, 2012 Perceived value among respondents of insurance and assistance types linked to added value accounts and payment cards, 2012 (table) Relationship between penetration rates for insurance and assistance policy types linked to added value accounts and payment cards and their perceived value among respondents, 2012 Claims / utilisation frequency among respondents for insurance and assistance policy types linked to added value accounts and payment cards, 2012 Claims / utilisation frequency among respondents for insurance and assistance policy types linked to added value accounts and payment cards, 2012 (table)

6.0 MOBILE / CONTACTLESS PAYMENTS

Possession and utilisation among respondents of contactless payment cards issued by banks, segmented by gender and age group, 2012

Awareness and utilisation among respondents of contactless payment cards issued by banks, segmented by gender and age group, 2012 (table)

Utilisation among respondents of mobile banking, segmented by gender and age group, 2012

Utilisation among respondents of mobile banking, segmented by gender and age group, 2012 (table)

Utilisation among respondents of mobile banking, segmented by make of mobile phone owned, 2012

Utilisation among respondents of mobile banking, segmented by make of mobile phone owned, 2012 (table)

Frequency of utilisation of mobile banking functions among respondents utilising mobile banking, 2012

Frequency of utilisation of mobile banking functions among respondents utilising mobile banking, 2012 (table)

Awareness among respondents with a mobile phone that opportunities to utilise mobile phones to make payments are likely to increase in future, segmented by gender and age group, 2012

Awareness among respondents that opportunities to utilise mobile phones to make payments are likely to increase in future, segmented by gender and age group, 2012 (table)

Awareness among respondents with a mobile phone that opportunities to utilise mobile phones to make payments are likely to increase in future, segmented by make of mobile phone used, 2012

Awareness among respondents that opportunities to utilise mobile phones to make payments are likely to increase in future, segmented by make of mobile phone used, 2012 (table)

Receptiveness among respondents with a mobile phone towards the concept of using mobile phones to make payments, segmented by gender and age group, 2012

Receptiveness among respondents with a mobile phone towards the concept of using mobile phones to make payments, segmented by gender and age group, 2012 (table)

Receptiveness among respondents with a mobile phone towards the concept of using mobile phones to make payments, segmented by make of mobile phone used, 2012

Receptiveness among respondents with a mobile phone towards the concept of using mobile phones to make payments, segmented by make of mobile phone used, 2012 (table)

Possession among respondents of mobile phones already enabled to make payments, segmented by gender and age group, 2012

Possession among respondents of mobile phones already enabled to make payments, segmented by gender and age group, 2012 (table)

Possession among respondents of mobile phones already enabled to make payments, segmented by make of mobile phone used, 2012

Possession among respondents of mobile phones already enabled to make payments, segmented by make of mobile phone used, 2012 (table)

Degree to which respondents with a mobile phone would naturally consider using 25 major consumer-facing organisations as a source of mobile payment solutions, 2012

Degree to which respondents with a mobile phone would naturally consider using 25 major consumer-facing organisations as a source of mobile payment solutions, 2012 (table)

Billing or debit methods preferred among respondents with a mobile phone for settling payments made by mobile phone, segmented by gender and age group, 2012

Billing or debit methods preferred among respondents with a mobile phone for settling payments made by mobile phone, segmented by gender and age group, 2012 (table)

Preference of respondents for using a special wristwatch rather than a mobile phone or payment card for making contactless payments, segmented by gender and age group, 2012

Preference of respondents for using a special wristwatch rather than a mobile phone or payment card for making contactless payments, segmented by gender and age group, 2012 (table)

7.0 ONLINE PAYMENTS Frequency of usage of different online payment means, 2012 Frequency of usage of different online payment means, 2012 (table)

8.0 DOMESTIC / INTERNATIONAL REMITTANCES

Frequency of need for paying individuals at home and abroad without being able to meet them in person, 2012

Frequency of usage of different means of making domestic remittances among respondents needing to pay individuals at home without being able to meet them, 2012

Frequency of usage of different means of making domestic remittances among respondents needing to pay individuals at home without being able to meet them, 2012 (table)

Frequency of usage of different means of making international remittances among respondents needing to pay individuals abroad without being able to meet them, 2012

Frequency of usage of different means of making international remittances among respondents needing to pay individuals abroad without being able to meet them, 2012 (table)

Approximate market shares of competing remittance means for domestic and international remittances, 2012

9.0 APPENDIX

To order this report:Credit Card Industry: Payment Metrics: Consumer Attitudes towards and Usage of Traditional and Emerging Means of Payment in the UK

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