Consumer Finance 2010 - Trends, Developments and Prospects

Consumer Finance 2010: Trends, Developments and Prospects

December 2009

Consumer Finance - Trends

Euromonitor International

Introduction Impact of the Economic Downturn Global Overview Regional Developments Global Prospects

2

Introduction



Scope This briefing on the global consumer finance market covers the following:

Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies opinions, reader discretion is advised

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Introduction



Key FindingsPay Before/Pay Now siphons share from Pay Later Evolving consumer mindset Cards and Electronic The economic downturn increased the appeal of Pay Before/Pay Now plastic payment instruments (debit, pre-paid) at the expense of Pay Later (credit, charge, store). All seven regions experienced erosion in Pay Later share, 2007-2009. Consumers responded to the economic turbulence by significantly altering their purchasing behavior. An emphasis on need over want, trading down and scaling back on discretionary purchases define the new cautious consumer. Cards and Electronic should continue to make inroads into the massive global cash opportunity. As cash and cheques continue their decline, Electronic becomes a bigger threat to Cards. Due, in part, to cardholders preference for non-revolving plastic instruments amidst the economic turbulence, Debit and Pre-paid appear positioned to post the highest transaction volume growth among financial cards. While eventual economic recovery and a rebound in consumers spending capacity will impact developed markets, developing markets will reap the benefits of modern retail format, travel, urbanization, youth and rising affluence. Asia Pacific and Eastern Europe expected to post two highest growth card payment markets in the short-term. Debit and Pre-paid should drive card payment volume growth in both regions. The developing market advantage over developed markets consists of lower unemployment, income growth and less debt. Developing markets also appear to own the optimism driver which serves as an important impetus for spending. While developing market consumer expenditure and card payment growth is expected to outpace developed market performance (2009-2014), developed market healing is critical. Developing markets may own the growth, but they lack the scale.4

Debit and Pre-paid

A host of drivers set to spur consumer spending and card usage Asia Pacific and Eastern Europe Developing markets better equipped to drive spending growth Developed market rebound necessary




5

Impact of the Economic Downturn



Economic Downturn Resets the Payments LandscapeEconomic Downturn The economic crisis dampened consumer spending and

Consumer Consumer spending data reflect a change in behavior

gave birth to a renewed cautiousness among consumers, particularly in developed markets. Even though the turmoil infected all payment instruments globally, card payments provided the most resistance to the downward pressure. While all consumer payments instruments exhibited negative volume growth (2008-2009), card payments managed to post the highest growth rate. The major consumer payments shift brought on by the downturn appears to be in cards whereby pay before/pay now transactions benefitted at the expense of pay later options.

courtesy of the economic turbulence. Adjustments to consumer lifestyle include trading down, eating at home and greater emphasis on need over want. All of these factors influence consumer spending in conjunction with spend variables: employment, savings, debt and asset prices. The crisis-battered consumer now curbs expenditure on discretionary purchases and prefers nonrevolving over revolving payment instruments. Of course, the issue that surfaces is one of permanence. How long will this newly minted consumer mindset last?

Markets A common consumer response to the crisis seems to

Looking ahead Globally, in 2007-2009 cards and electronic were able to

have permeated the globe. Regardless of region, consumers are reacting to the economic headwinds by restraining spending and relying less on revolving credit. In the lead up to the crisis, consumer spending had been detached from income. Now, all regions (especially Middle East and Africa and Latin America) have embraced the concept that spending should be tethered to income. While reactions to the crisis appear similar across regions, the developing market consumer remains better positioned to resume spending.

siphon payments share despite the possibility of a flight to paper-based instruments. Their performance amidst the downturn provides the foundation for their projected relative high growth. In card payments, debit and prepaid should outperform all other card transaction formats. Developing markets should benefit from travel, youth and urbanisation. While growth resides with developing market consumers, their lack of scale underscores the importance of a developed market rebound.6




Global Economic Turbulence Batters Cards and Payments

Note: Year-on-Year exchange rates.

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Economic Downturn Catalyses Shift to Pay Before/Pay Now The economic downturn has impacted financial cards via both shifting plastic payment preference and dampened consumer

spending. While debit and pre-paid exhibited the highest plastic growth rates pre-crisis, the downturn caused consumers to place an increasing emphasis on Pay Before payment instruments. Globally, Pay Before (e.g. Pre-paid) and Pay Now (e.g. Debit) transactions benefitted, as consumers preferred to spend within the confines of their wallet. Pay Later (e.g. Personal Credit, Personal Charge and Store) mechanisms suffered from both a reduction of supply by issuers and an evolving consumer mindset constricting demand. Declines in revolving credit appear the result of cramped credit lines, pruning of risky customers, tightened lending standards and defaults. A new, prudence-infused consumer mindset also allowed Pay Before/Pay Now to siphon share from Pay Later transactions. Over the 2007-2009 period, personal charge, pre-paid and store transaction share remained flat. However, debit captured almost four percentage points of share primarily at the expense of personal credit.

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Pay Later to Pay Before/Pay Now Migration Global in ScopeRegional Perspective Pay Later as a Percentage of Card Payment VolumeRank 1 2 3 4 5 6 7 Name Eastern Europe North America Australasia Asia Pacific Middle East & Africa Latin America Western Europe % Pay Later 2007 20.0 62.7 62.9 61.4 76.6 59.1 35.1 % Pay Later 2009 13.5 57.4 58.4 57.1 73.7 57.4 33.6 % Shift -6.5 -5.3 -4.5 -4.3 -2.9 -1.7 -1.5

After posting the highest regional GDP growth (25.6%, 2007-2008), Eastern Europe is expected to suffer the largest dip in GDP

(-6.3%, 2008-2009). The economic situation imparted a conservative mindset toward consumer spending and usage of revolving payment instruments. Eastern Europes shift to Pay Before/Pay Now further underscores its status as the least reliant region on Pay Later transactions. Eastern European personal credit payment transaction activity grew (19% CAGR, 2007-2009); however, debits growth (45% CAGR) far exceeded its revolving credit counterpart. The Hungarian market offers a glimpse of the growth prospects for personal credit in Eastern Europe. Personal credit has outpaced debit in terms of cards in circulation growth (13% to 5% CAGR, 2004-2009). The issue has been converting card penetration to utilisation. Hungarys nascent period for credit card adoption presents hurdles including high cost of ownership 40-50% APRs - and lack of consumer understanding of credit products. Growing revolving credit literacy coupled with cobranded cards seem necessary to drive up activation rates and, ultimately, card payment utilisation.

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Latin Americas Evolving Consumer Mindset Impacts CardsLatin America (% y-o-y growth)Data Type Product 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14

Cards in circulation Cards in circulation Transactions Transactions Volume Volume

Debit Personal Credit Debit Personal Credit Debit Personal Credit

9.7 28.0 24.2 24.5 26.6 31.6

8.5 27.2 19.7 23.5 25.6 26.5

8.6 15.6 17.4 13.7 25.2 19.7

6.8 9.5 12.4 8.9 21.2 10.7

6.7 9.5 14.1 9.3 11.4 7.1

6.6 9.2 14.2 9.6 11.8 7.7

6.5 8.4 14.4 8.7 12.7 8.0

5.9 8.0 13.2 7.9 11.3 6.9

5.4 7.8 12.0 7.2 10.1 6.8

The tug-of-war between debit and personal credit serves as the engine of the shift from Pay Later to Pay Before/Pay Now. In Latin

America, personal credit cards in circulation growth consistently outpaced debit although the gap narrowed recently. Growth in personal credit and debit number of transactions and transaction volume mimicked that of cards in circulation up until the downturn. In 2008, the Latin American card payment landscape experienced a significant shift spurred, in part, by the economic downturn. Card utilisation ceased to track card presence as debit growth exceeded personal credit in both number of transactions and volume. The shift in transaction and volume preference from personal credit to debit speaks to the evolving consumer mindset as a critical component cardholder behaviour. The turbulence experienced by regions such as Latin America begs the question as to the permanence of the consumer mindset. Projections favouring debit utilisation over personal credit indicate a stickiness for debit transactions and the cautious consumer. The high cost of financing consumption via credit cards negatively impacted personal credit usage in Argentina. Annual percentage rates as high as 60% coupled with minimum payment requirements raised from 3% of the outstanding balance to 10% contributed to personal credit volume underperforming all other cards in 2008-2009.

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Economic Downturn Binds Consumer Spending to IncomePre-Economic Downturn

Economic Downturn and Beyond The evolving consumer mindset surfaces in the apparent

Consumer expenditure growth exceeds annual

disposable income growth In the years - 2003-2008 current state of recognition of income as the ultimate - leading up to the economic crisis, North America and foundation for spending. Unlike the pre-crisis years, Western Europe planted future discontent by dislodging growth in annual disposable income is expected to spending from earnings. North American consumer outpace consumer spending for every region (2008expenditure growth (5.9% CAGR) outpaced growth in 2013). Consumers appear interested in maintaining a annual disposable income growth (5.5% CAGR) while larger cushion between what they earn and what they Western Europe matched spending growth to annual spend. Every region exhibits a lower spending to income disposable income (9.3% CAGR for both). Despite ratio in 2009 versus 2008. spending growth outpacing income, neither regions In 2009, Latin America and Middle East and Africa consumer spending ever exceeded their annual reined in spending, drastically lowering their ratio. disposable income in a single year. Forecasts through 2013 suggest that none of the regions Consumer expenditure outstrips annual disposable expects to retest their 2008 ratio. income The lead up to the economic crisis presents a Ratio of Consumer Expenditure to Annual different story for developing regions. During the 20032008 period, two regions (Latin America and Middle East Disposable Income and Africa) routinely saw consumers outspend their Region 2008 2013 income. Asia Pacific 0.85 0.82

Ratio of Consumer Expenditure to Annual Disposable IncomeRegion MEA Latin America 2007 1.23 1.03

Eastern Europe 2008 1.20 1.01 Latin America MEA North America Western Europe

0.93 1.01 1.20 0.95 0.89

0.91 0.93 0.92 0.93 0.8811




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Global Overview



Cards and Electronic Continue to Pressure Paper2004-2009 Globally, a flight to paper-based instruments (e.g. cash) in the wake of the economic crisis certainly seemed feasible.

Yet, in 2007-2009, cards and electronic transactions accumulated share from both cash and cheques. Despite erosion in share, cash held its position better than cheques most likely due to the ramp-up in debit usage.

2009-2014 As cash and cheques maintain their decline, electronic transactions continue to grow into a threat to cards. Electronic

is expected to outperform all other consumer payments, reducing the ratio of card payment volume to electronic volume from 2.18 in 2009, to 2.07 in 2014. Direct deposit and efforts to promote bill pay contribute to rising awareness and familiarity with electronic transactions. Electronic transactions should also benefit from non-revolving status, as payments are deducted from bank accounts. Also, the shift to Pay Before/Pay Now occurring in card payments may cause consumers to pursue the similar capacity attached to electronic transactions.

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Global Overview



Global Cash Foundation Massive, But ShrinkingKey approaches for converting cash to plastic Plastic has already made inroads on paper by capturing micropayments, a traditional cash stronghold. Targeting the

high cash unbanked user via pre-paid cards serves as another critical component in driving down the use of cash. Government benefits and payroll cards provide high-growth examples of effective channels for introducing pre-paid offerings to the unbanked.

Barriers insulating cash Cultural attitudes, merchant resistance to card payments, consumers relying on cash as a way to monitor spending

and cash fortifying payments infrastructure underpin the viability of cash transactions.

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Global Overview



Category Case Study: Alternative Cash Payment Methods Savvy technology innovators in cash-dependent markets have introduced successful alternative payment methods that cater to

the culture of cash usage. Russias OSMP first introduced a system of stand-alone terminals at which consumers can make a range of payments - from bills to ticket purchases - using cash, in 2004. The success of the system led the company to introduce the Qiwi brand alternative payment system in Russia in April 2008. Qiwi, quickly growing in popularity, combines the cash payment terminal function with an internet payment account. Consumers can use OSMP terminals to make electronic payments as well as reload an online Qiwi payment account with cash. Through Qiwi, OSMP became not only a competitor to card operators and Russian banks which offer bill payment services at ATMs, but also to leading Russian internet payment platforms Yandex Money and WebMoney Transfer. Yandex Money accounts can be reloaded at some ATMs and terminals for a fee, but one of the advantages of the Qiwi system is free re-loading of Qiwi internet accounts at all Qiwi terminals. There are some 24,000 Qiwi terminals in Moscow alone compared to about 21,000 ATMs of industry leader Sberbank in all of Russia. Competition in cash payment terminals is currently booming in Russia: OE Investments acquired OSMP and competitor e-port in late 2008 and merged the two systems in August 2009. Estimates for transaction value on the terminals are US$6-22 billion, or up to three times the value transacted on Russian credit cards. OSMP expanded operations to China and plans to enter Azerbaijan, Turkmenistan and Kyrgyzstan. Other developing markets with entrenched cash cultures have seen similar innovations. Brazils Boleto Bancario system, launched in mid-2006 by GlobalCollect, allows consumers to order a good or service over the internet for which they receive a confirmation slip; they print out the slip and take it to a bank branch to make the physical payment in cash. GlobalCollect reported having a 20% share of Brazilian e-payments within two years of launch. 54% of Brazils consumer payments are cash.

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Global Overview



Cash Usage Still Dwarves Card Usage in Russia

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Global Overview



Significant Opportunity Exists for Cards to Convert Cash to PlasticRegional Consumer Payment Volume Landscape 2014

Note: The graphic represents the projected total global consumer payment volume market segmented regionally and by type of consumer payment. Regions and consumer payment volumes (US$ mn) as follows: AP (Asia Pacific) $9,492,975; AUS (Australasia) $808,335; EE (Eastern Europe) $2,581,034; LA (Latin America) 2,396,255; MEA (Middle East and Africa) $1,012,816,; NA (North America) $10,561,922; WE (Western Europe) $8,741,469

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Global Overview



Debit and Pre-Paid Expected to Siphon Revolving Share2004-2009 High volume growth for debit (15.6% CAGR) and pre-paid (18.5%) allowed for share capture at the expense of credit

(9.1%), charge (7.3%) and store (2.7%). Pre-paids under-performance in cards in circulation growth compared to both debit and credit highlights a high conversion rate of issuance and utilisation.

2009-2014 Not surprisingly, debit and pre-paid are projected as the two highest growth volume transaction types spurred, in part, by

the cautious consumer seeking a haven in non-revolving cards. Pre-paid should benefit as the likely entry point into the financial services pipeline for the unbanked and the growth potential for government benefits, transportation and general purpose reloadable cards. In 2008, global debit payment volume exceeded personal credit for the first time. In 2013,debit is expected to usurp the overall credit categorys position as the preferred card payment transaction method.

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Global Overview



Global Competitive Focus Shifting to Debit and Pre-Paid As debit and pre-paid emerge as the highest growth opportunities globally, operators and issuers are increasingly

shifting their competitive strategies toward these categories. Domestic bank associations continue to dominate the operation of national debit schemes in almost half of the worlds top 44 financial card markets, making debit growth prospects highly challenging for international operators globally. While co-branding arrangements for cross-border usage through the Maestro and Interlink debit platforms have allowed MasterCard and Visa to develop some level of debit presence in these markets, cross-border debit usage remains low even in well integrated regions such as Western Europe, constraining profit potential through this channel. International operators are thus focusing on gaining share of own-branded debit cards where possible; they managed to make the most significant gains from local debit players, on the level of over 2% of debit function cards in the market, in South Korea, Russia, Malaysia and Australia in 2008. Local debit threats to international operators are greatest in Asia Pacific and Western Europe and will continue to be in the short term. Bilateral card acceptance agreements proliferated in Asia in 2009 driven by China UnionPays regional expansion efforts, while a number of Europes bank associations-come-local/national operators are banding together to form their own cross-border operating platform. The Euro Alliance of Payment Schemes (EAPS) effort seems most well-equipped to become a real competitor to international debit operators due to the alliances utilisation of existing infrastructure and cost savings potential for scheme participants. While the BRIC markets (excluding China) proved fertile ground for international operators debit and pre-paid expansion efforts, where they have quickly come to dominate the debit category, challenges continue to arise. 20102011 may see several of Russias local/national debit systems, including Sberbanks ORPS (formerly Sberkart) and the Urals/Siberia regional leader Golden Crown, unite to form a national payment system to more seriously compete with Visa and MasterCard. As consumers outside of Moscow and St. Petersburg increasingly adopt card usage, these local operators may be better placed for growth, particularly through salary and social debit card projects, their current strength. A number of issuers have made changes to their card portfolios in 2008-2009, cutting back on revolving credit cards and shifting focus to debit and pre-paid, fighting for new cardholders against competitors in similar situations. This has been most visible in the US market, where industry consolidation allowed JP Morgan Chase and Wells Fargo & Co to grow their debit presence by 59% and 44% respectively in terms of card numbers in 2008, while at the same time Chase restrained growth in credit function cards to a mere 6% and Wells Fargo to 20%.

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Global Overview



Local/National Debit Operators Maintain, Expand Presence

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Global Overview



Government Highest Growth Pre-Paid Channel in Recession Pre-paid remained the highest growth category in both cards and value during the global recession; growth in

issuance of travel and remittance cards saw the most significant fall in 2009 from historic double-digit levels due to reduced global growth in both tourism expenditures and remittances values during the downturn. Government benefit programmes proved the highest growth distribution channel for pre-paid cards globally in 20082009. In a difficult economic environment, governments are recognising the efficiency and security of benefits distribution through cards. Programmes were introduced in Australia, Argentina, Italy and the UK in 2008-2009 and are expected to expand and spread in the forecast period. Network branded gift cards, while still only a fifth the size of the merchant issued gift card category, grew rapidly due to increasing adoption by developed market consumers and successful entry into a number of key European markets, including Spain, Switzerland and Sweden, since 2006.

Note: Bubble size represents number of pre-paid cards by type, 2009; Range: 2.6-471.6 mn

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Global Overview



Category Case Study: Post Office Open-Loop Pre-Paid CardsItaly: Poste Italiane PostePay Program Launched: November 2003 Target: Youth, travellers, internet users, unbanked Growth: By September 2009, 5 mn cards since launch Success Factors: Poste Italianes 14,000 branch

Romania: Pota Romn cashplus Program Launched: April 2009 Target: Unbanked, internet users Growth: Projecting 420,000 new card users annually

distribution network, along with an extensive PostePay re-load network including postal branches, 5,000 ATMs, internet and retailers, proved the major success factors behind PostePays uptake. Relatively limited access to traditional banking services for unemployed consumers from recent immigrants to pensioners continues to drive growth in pre-paid cards in Italy, where 58% of the population was economically inactive in 2008.

based on April-September 2009 growth rates Success Factors: Pota Romns initial success can be accredited to accurate positioning. The cashplus cards ATM withdrawal function and the promotion of bill pay capability (to be launched in early 2010) appeal directly to unbanked Romanian consumers, who tend to use cards as cash access devices and pay bills at post offices. Pota Romn estimates the unbanked in Romania at around 11 mn people in 2009 or 50% of the total population. The number of internet users in Romania has climbed at over 25% annually since 2003; cashplus is planned for the markets internet payments niche, for which few methods beside credit cards exist. Key Point: Postal systems and utility providers have highly effective distribution networks for cards targeted at the low-income and unbanked segments. Post offices tend to serve a more significant role for under-banked consumers in developing markets where electronic payment infrastructure for card to utility bill transactions is lacking. Partnerships with these types of service providers are emerging as a major opportunity for players within the pre-paid segment around the world.

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Global Overview



Credit to Maintain Entrenched Position Despite DownturnRegional Card Payment Volume Landscape 2014

Key: Beige Store Green Pre-Paid Grey Charge Red Credit Blue Debit

Note: The graphic represents the projected total global card payment volume market segmented regionally and by type of card payment. Regions and total card payment volumes (US$ mn) as follows: AP (Asia Pacific) $3,127,653; AUS (Australasia) $396,025; EE (Eastern Europe) $458,453; LA (Latin America) $625,559; MEA (Middle East and Africa) $160,188; NA (North America) $5,719,531; WE (Western Europe) $3,378,105

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Global Overview



Modern Retail Format and Online Channel Spur Spending Brand driven Besides offering

consumers a clean, comfortable setting, hypermarkets (grocery retail outlets with over 2,500 sq m of selling space) improve the shopping experience and may expose consumers to foreign and premium brands. The desire for new brands may encourage a lift in spending. Bump in merchant acceptance Modern retail formats - hypermarkets and shopping malls - increase plastic acceptance points for shoppers. The introduction of a hypermarket or shopping mall brings with it merchants accepting of plastic. Increased opportunity for spending The concept of one-stop shopping encourages spending in a captive format accepting of financial cards. In Russia, some hypermarkets responded to consumer demand by remaining open 24 hours a day. Financial card portfolio exposure Hypermarkets increase awareness of financial cards through their card issuing programmes. Consumers may be more likely to enter the financial card fold via opting for a retailer card instead of a bank offering. Online transactions Growth in ecommerce directly benefits cards as plastic is often the preferred payment method online.

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Global Overview



Role of Retail Groups in Financial Cards on the RiseTop Ten Retail Groups Active in Financial CardsName 2008 total Cards, cards in % circulation CAGR (mn) 20032008 27.8 19.3 17.7 15.4 13.9 13.1 11.7 15 9 9 15 18 13 18 Key markets % card category portfolio mix, 2008 Credit Store 70 30 Retail groups around the world are

C&A Mode Brenninkmeijer & Co AEON Group Carrefour SA Guararapes Confeccoes SA Arthur Lundgren Tecidos SA JC Penney Corp Inc LaSer Group

Brazil; Argentina

Hong Kong; Credit 100 Japan; Thailand France; Brazil; Store 94 Belgium; Italy Pre-paid 6 Brazil Store 100 Brazil Brazil France; Netherlands; UK Brazil USA Spain; Portugal Store Store 100 100

strengthening their role in financial services. Latin American and Western European retail players continue to be the most active in card issuance, threatening classical issuers through their relationship with the consumer, brand equity and customer loyalty. One of the greatest opportunities for retailers lies in the untapped Russian market. While chained retailers are making strides in Russia, only Metro Cash & Carry and Auchan Group have significantly introduced financial cards.

Marisa Lojas Varejistas Ltda Target Corp El Corte Ingls SA

11.3 7.7 7.0

50 -25 7

Store 64 Credit 29 Pre-paid 7 Store 100 Store 100

Store 95 Pre-paid 5

Key Point: Rather than outsourcing financial services, key retail groups including C&A Mode Brenninkmeijer & Co, Carrefour and Auchan Group are increasingly taking advantage of the cobranding phenomenon to combine loyalty marketing with expansion into profitable banking products. Large retail groups have the scale and marketing and distribution networks to introduce strategies that integrate flexible card products, loyalty/rewards programmes and technology in a way that increasingly threaten classical issuers.

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Global Overview



Tourism and Urbanisation Encourage Card Usage Middle East and Africa and Asia Pacific are positioned to benefit from consumers on travels. Travel projections

suggest that card payments should benefit as the likely payment instrument for booking airline tickets. Strong growth in arrivals floods a market with cardholders prone to use cards when on holiday or business. Tourism exposes lower card usage markets to the plastic economy and encourages infrastructure gains to accommodate visitors. A notable example of this effect is Egypt, where despite relatively low domestic card penetration growth, infrastructure has boomed in recent years, with the number of point-of-sale terminals growing at over 30% in 2008. Urbanisation drives card payment usage in a variety of ways. An urban setting provides an indoctrination for those new to card payments. It brings people into contact with cards and financial services and soon the newly urbanised consumer may consider the financial card as an urban essential; transportation cards, for instance, have increasingly spread to urban centres in remote or less developed regions including Siberia in Russia and several areas in Colombia in recent years. The migration from rural to urban lifts card payment volume by simply supplying myriad opportunities to use cards versus the previous constrained setting. The consumer is transplanted from a less likely (rural) to a more likely (urban) scenario for card usage. Unbanked rural consumers may find themselves banked urban dwellers due to the exposure to financial services and general acceptance of banked status in the city. Urban populations also provide easier access for card industry marketing and customer acquisition efforts.

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Global Overview



Significant Infrastructure Gains, Yet Cash Proves Resistant The robust growth in infrastructure

(ATMs and POS) over the 2004-2009 period has contributed to greater uptake in financial card usage for the BRIC markets. Attempts to reach into rural areas raised awareness of plastic among the unbanked and generally hard to connect with consumers. The ramp-up in infrastructure left some high cash usage markets - India and Russia - posting declining payment volume per POS terminal (2009 versus 2004). This deceleration suggests resistance offered by cash and concomitant high growth in ATM infrastructure. The extension of POS terminals into rural, intense cash strongholds may explain the dip for both markets. POS terminals may have been placed in areas that were not ready for uptake of cards. However, China and Brazil experienced significant uptake in card usage per POS suggesting greater acceptance of card payment culture and perhaps a higher percentage of POS terminals placed in urban areas.

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Global Overview



Youth Present Enormous Opportunity for Card Payments Youth, defined as those under 19 years old,

account for roughly half of the population of Middle East and Africa and more than one third of Latin America and Asia Pacific.

In Africa Markets such as Kenya (18.3 median age 2009),

Nigeria (18.4) and South Africa (24.7) emphasise the importance of implementing a strategy to court the youth market. The youth population may be more likely to shirk cultural norms of parents and pursue a westernised lifestyle. They may be less likely to hold an anti-traditional financial service mentality potentially held by previous generations and, thus, more likely to be banked. Interest among the youth in mobile phones and the internet provide an installed base upon which to introduce financial services. Africa counts five markets in the top 10 in projected (2008-2013) highest growth broadband internet-enabled computers; Egypt and Nigeria break into the top 10 in growth for possession of a mobile phone. Mobile phones allow consumers to leapfrog traditional plastic card infrastructure and participate in the modern economy. Similarly to the empowering impact of the internet, financial transactions become reality even without access to traditional POS infrastructure.28

Global Overview



Global Affluence Growth Centred on Developing Regions For purposes of this briefing, Euromonitor International terms households with annual disposable income over US$150,000 as members of

the Global Affluent. Not surprisingly, highest growth in global affluence is confined to developing regions. Out of the top 20 highest growth markets (2008-2013), Asia Pacific (with 7) leads followed by Middle East and Africa (6), Eastern Europe (5) and Latin America (2). Western Europe appears to be the region most likely to experience significant erosion in affluence. While 33% of UAE and 16% of US households meet the US$150,000 definition, only a fraction of BRIC households qualify Russia and Brazil (0.9%), China (0.2%) and India (0.1%). Projected high growth in Russia and India leads to an additional 78,000 Indian households and 199,000 Russian households considered part of the Global Affluent by 2013. By comparison, the modest growth projections for the US (3.3% CAGR) adds roughly 3.2 million new Global Affluent households. The Global Affluent expand the pool of desirable consumers by meeting qualifications for products, increasing likelihood to tap into credit and possessing solid spending capability. Besides the increase in available monetary resources, growth in this group is necessary to help offset, in part, the impact of the downturn. Presumably, the new Global Affluent will present a desirable, prime customer set unscathed by developed market debt burdens.

Projected High Erosion Markets Global Affluence (Households with ADI over US$150,000)Market Australia Switzerland United Kingdom Turkey South Korea % CAGR 2008-2013 -14.5 -12.7 -8.7 -6.6 -4.629




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Regional Developments



Impact of Global Recession Felt Across Regions (1)Region Effect Short to Medium Term Credit card spending growth in developed markets will stagnate, while overall card spending is driven by debit. Impact 2009 Impact 2010

Asia Pacific The global recession has not notably slowed the rapid growth in cards and card payments, driven by Chinese and Indian consumers, while credit card spending in developed markets such as Singapore dropped due to pricing increases. Australasia Australasias relatively insulated financial services industry was able to weather the recession and generate growth in card payments in all categories but charge as consumers sustained expenditure levels. Eastern Europe While growth in overall card payments was sustained by new card users, both consumers and issuers shied away from credit and store cards. Bad card debt rose as debt-strapped consumers struggled to make payments. Urban populations in Middle East and Africa and Asia Pacific are expected to rise most rapidly in the forecast period. The new urban consumer will be more likely to be exposed to card payments, becoming a card user through growing entry points such as pre-paid transport.

A rise in non-performing credit card lending is expected as the recessiondriven unemployment rate peaks at over 7% in 2010. A constant stream of new card users will fuel growth in card payments, while credit card lending will rebound with economic recovery.

Latin America

Further penetration of card usage to low-income and unbanked consumers, particularly in Brazil, sustained growth in card payments. The booming Mexican credit card category saw the most severe effects, stagnating almost totally.31




Impact of Global Recession Felt Across Regions (2)Region Effect Short to Medium Term Impact 2009 Impact 2010

Middle East Growing card usage, particularly by middleSouth Africa will see higher nonand Africa income South African and GCC consumers, performing card lending; the credit kept debit payment rates on the increase, category is expected to recover due to while credit usage suffered due to constrained the FIFA 2010 World Cup. recessionary consumer spending patterns.

North America

The global recession accelerated consumers Many issuers will re-price credit card shift from pay later to pay now cards, while products in the US, motivating reduced spending slowed overall card consumers to continue the shift to pay payment growth. Backlash toward the financial now and pay before products. industry resulted in sweeping US credit card legislation. Growth in credit and store card payment value fell across the region, as even already creditaverse German and Belgian consumers slowed spending growth on pay later cards. The booming Turkish card market will lead growth in card payments, while credit spending growth will recover in most markets by 2011.

Western Europe

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Asia Pacific: Debit Continues High Growth Trajectory While personal credit retained its prominent role in consumer spending patterns in Asia Pacific despite the economic

downturn, constituting over 50% of all card payment transactions in Japan and 40% of all card payment transactions in South Korea in 2009, debit continued its trajectory as the regions highest growth category. Credit continues to dominate the issuance of financial cards in South Korea, while the number of credit function cards is expected to surpass debit function cards for the first time in Hong Kong in 2010. Increased pricing in 2009 with reported interest rates as high as 26-31% in Hong Kong has not significantly reduced demand for credit in developed Asian markets. Credit is expected to remain over 50% of regional card payment transaction value through 2014.

Note: Bubble size represents number of cards by function; Range: 5.9 mn 3.1 bn

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Developing Markets Drive Debit Growth During Downturn As growth in debit card issuance slowed to under

3% in markets such as Japan, Singapore and Hong Kong in 2009 and even fell negative in Taiwan in 2008, Asia Pacifics developing markets have kept the debit category in focus for regional consumer finance players. In China, accelerated efforts by the government to spread debit cards to rural and migrant workers drove high debit issuance growth despite increasing market maturity in urban areas. China Postal Savings Bank and small rural banks have stepped up debit card issuance in 2009, while established players Agricultural Bank of China and Industrial & Commercial Bank of China lost around 3% of the Chinese debit market in 2008. The Chinese governments opening of the debit market to foreign issuers in 2007 has also increased competition; foreign entrants including HSBC and Citibank have managed to issue almost 200,000 debit cards in China by the end of 2008 by targeting affluent urban consumers more familiar with foreign brands. Competition in Indias debit market remained strong in 2008 due to the healthy liquidity positions of its private banks. While large state-sponsored banks in other BRIC markets gained debit card share thanks to the crisis, Indias private HDFC and UTI Banks increased their debit shares while State Bank of Indias position in the debit market stagnated. Indian consumers continued to increase debit card usage in 2009, with growth in the number of debit transactions of over 40%.

Debit card growth in Vietnam has continued to outpace all

other Asia Pacific markets due to government efforts to develop the nascent card payment system and improve transparency, including a 2007 mandate requiring employers to make salary payments through bank accounts rather than in cash. Vietnams banked population, at 10 million in 2009, represents just 16% of the population over 15 years old. The banked population grew at an 8% CAGR since 2004, compared to 23% in India and 12% in Indonesia. Government projects may continue to accelerate growth in Vietnam in the forecast period.

Vietnam Growth 06-07: 207%

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Australasia: New Threats, Continued Regulatory Pressure High debit usage growth rates continue to make Australasia one of the worlds leading regions in the migration from

paper to plastic payments. While Australasian consumers shift to more frequent debit usage from credit noticeable as of 2004 has accelerated over the past two years, debit growth has mainly been driven by cash replacement rather than consumers deleveraging within the context of the economic crisis. Australias big four banks remained fairly insulated from the economic downturn thanks to strong liquidity positions and relatively low exposure to sub-prime lending and related activities. Some card industry consolidation took place, however, as several of the major banks have acquired weaker targets: Commonwealth Bank of Australia (CBA), the regions largest issuer, gained 2% of the market in terms of cards issued in 2008 aided by its October acquisition of BankWest, while WestPac Banking Corp should see gains from its St. George acquisition in 2009. The Reserve Bank of Australia, which re-confirmed

its commitment to interchange regulation in August 2009, is continuing to put pressure on the payments industry. The newest potential threat to international operators, which have gained around 9% of the debit card market from local bank association network EFTPOS since 2006, is a proposal to regulate EFTPOS transactions under the same conditions as international operators transactions. Banks would thus be able to profit from EFTPOS transaction fees rather than pay a fee to acquirers as is currently the case. The RBA seems bent on reviving EFTPOSs role in the Australian debit market, presenting a threat to the gains international operators have made. While the Australian card market could be one of the most lucrative in the world given high card usage rates, the currently stunted revenue potential due to interchange regulation has reduced its appeal.35




Eastern Europe: Cards Continue to Disrupt Cash Culture While ATM cards and transactions retained their overwhelmingly prominent role in Eastern Europes cash-dependent consumer markets, growth in both

value and number of debit transactions was sustained at high rates during the recession. Debit cards continue to gain momentum, as transaction growth will remain above 25% in 2009. While some growth is expected for store cards in Russia, the category has floundered in Hungary, Czech Republic and Poland, as retailers have opted for co-branded credit programmes instead. Regional store card leader Cetelem, owned by Frances BNP Paribas Group, has continued to migrate its Eastern European store card portfolios to co-branded credit, accelerating the demise of store cards in the region.

Note: Bubble size represents number of cards by function; Range: 0.9-298.2 mn

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Eastern European Credit Boom Comes to a Standstill As the heady days of economic expansion and strengthening local currencies came to an end in the second half of

2008, so did the seemingly immense demand for consumer credit in Eastern Europe. Growth in card lending stayed positive in 2009 in Czech Republic and Hungary thanks to the novelty of the credit card category and to slightly delayed effects of the crisis on consumers spending preferences. Russia and Poland, on the other hand, experienced immediate effects on card lending due to banks constrained liquidity positions and falling local currency values. Russkiy Standard and Renaissance Capital, two of the top 10 credit card issuers in Russia, cut credit card limits for their customers as early as October 2008. Poles, burdened by some US$60 billion in Swiss franc, euro and yen mortgages and other foreign currency consumer loans, pulled back on credit card spending as soon as the value of the zloty started its descent in September 2008. The influx of cheap foreign currency mortgages in

Eastern Europe in recent years turned into a major burden at the end of 2008 as national currencies lost up to 30% of their value in a few months. At the beginning of 2009, 72% of Polish, 70% of Hungarian and 18% of Russian mortgage loans were denominated in foreign currencies. Consumers struggle to service inflated mortgage debt had a dampening effect on demand for card lending as well as on debt repayment rates. Beyond cutting card limits and raising pricing, banks have also reacted by refocusing on shorterterm and local currency lending. Card lending growth will return to pre-crisis levels in Russia and Hungary as early as 2011, while the credit card slowdown in the Polish market is expected to be more permanent. Credit card issuing growth will continue at its currently slower pace, falling below 10% across the region by 2014.

Note: Lines = Gross Card Lending; Columns = Number of Personal Credit Cards Issued

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Latin America: Growth in Card Spending Continues Debit proved to be the most resilient card category in Latin America during the global economic downturn, driven by growing card usage by lower-income

consumers in markets such as Brazil and Mexico. Increasing competition between large Brazilian banks in simplified chequeing accounts (conta simplificada) targeted at the low-income segment has played a significant role in this growth and proven a lucrative opportunity. Store cards continued to succeed as a category, sustaining even higher growth in number of transactions than debit. Retailers including C&A Mode Brenninkmeijer & Co and Carrefour expanded their portfolios at high rates in the face of the recession, using loyalty and rewards components to drive retail sales as well as card-related revenue.


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Industry Consolidation Shifts Payments Power BalanceGlobal Recession and Maturing Industry Conditions Give Impetus to M & A ActivityMajor Latin American banks have responded to the crisis

Brazil Sees the Most Significant Changes After the 2009 wave of industry consolidation, over 93%

of Brazils debit cards and over 60% of its credit cards will be issued by the countrys top five banks. by shoring up domestic capacity and strengthening positions in the financial cards market. Ita Unibanco became the largest bank in Latin America Key mergers and acquisitions in 2008-2009 included: both by assets and credit cards in circulation, giving it significant economies of scale and capacity for UNIBANCO: merged with Banco Itau Holding Fin SA development of other aspects of its financial cards Banco do Brasil: acquired Banco Nossa Caixa SA activities. This makes the banking giant a threat to Banco Santander: acquired ABN AMRO Banco Real operators and payments players across the region. Banco Chile: merged with Citibank N.A. Chile Current regulatory developments may also have a Top Debit Issuers in Latin America - % Cards Share sweeping impact on the market and will potentially force Rank Name 2006 2007 2008 separation of merchant acquisition and processing activities, ban exclusive processing rights and require 1 Banco do Brasil SA 15.7 16.5 17.0 integrated POS terminals for multiple card acceptance. 2 Caixa Econmica Federal 14.8 14.8 15.6 Local players such as Policard, So Paulos Credsystem 3 Banco Bradesco SA 16.0 15.5 15.2 and pre-paid company Goodcard are set to benefit. 4 5 6 7 8 9 10 Banco Ita Holding Fin SA Banco Santander SA UNIBANCO SA HSBC Holdings Plc BBVA BanColombia SA Citigroup Inc 8.2 3.3 2.6 2.6 1.6 1.4 9.1 5.1 3.3 2.9 2.7 1.6 1.3 9.2 8.1 3.4 3.1 2.6 1.9 1.2 Key Point: The merger between UNIBANCO and Itau creates not only a Latin American regional powerhouse on the card issuance side, but also another serious potential challenger for operators. UNIBANCOs own branded Hipercard network, which accounted for almost 8% of personal credit cards and over 4% of personal credit transaction value in Brazil in 2008, now has increased potential to spread to other markets such as Chile where Itau has greater issuing presence.39

Note: Orange test represents share growth




Middle East and Africa: Ripe Regional Market for Pre-Paid While growth in personal credit, personal charge and store card payment transaction value shrank by over 10

percentage points and debit growth stagnated in Middle East and Africa in 2009, both the open and closed-loop prepaid categories continued to stand out as rich opportunities in the region. Middle-income South African consumers are the main driver behind the growing pre-paid trend. Increasing adoption of closed-loop gift cards introduced by leading retailers such as Edgars Consolidated Stores, Woolworths Holdings and Foschini in 2005-2006, has led to a booming pre-paid market. Other retailers have followed suit, with new entrants since 2007 including hypermarket chains Pick n Pay Stores and Shoprite Holdings. Other applications are expected to drive future growth in the pre-paid segment: the development of public transport and travel infrastructure in the region, driven in part by the 2010 FIFA World Cup, will help propel future pre-paid product launches. On the open-loop side, the introduction of pre-paid payroll cards in Middle Eastern markets has created a growing opportunity. Saudi Arabias Bank Al Rajhi and the UAEs Emirates NBD lead the region with their targeting of unbanked consumers through pre-paid payroll cards introduced in 2009. While the influx of migrant workers to the Gulf economies has slowed due to the global recession, the success of the recent open-loop launches reflects the potential to target the Middle Easts significant unbanked population. Saudi Arabias foreign population often ineligible for traditional banking services is expected to grow by over 4% CAGR during the forecast period.40




North America: Shift in Spending Habits Solidifies The North American shift from credit to debit in card spending accelerated in 2009 as consumers reigned in spending and deleveraged during the economic

downturn. Growth in credit card transaction value fell negative, while the growth in credit transactions stagnated. Debit, on the other hand, sustained over 8% growth in value and volume. The weak retail sales environment in 2009 due to the global recession had a visibly negative impact on the usage of store and closed-loop pre-paid cards, well over two thirds of which are merchant-issued gift cards in North America. Transaction value growth is expected to recover across all card categories in 2010, while pre-paid will continue to outpace value growth in other categories through 2014 due to increasing penetration of open-loop cards.

Note: Bubble size represents number of cards by function; Range: 9.0 mn 1.6 bn

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Regulatory Moves to Profoundly Affect Card IndustryUSA The financial industry in the US has suffered a barrage of

public backlash in 2008-2009 due to the financial crisis. The card industry has not escaped unscathed: legislation under the Credit CARD Act was signed into law in May 2009 that will require a number of consumer-friendlier practices from issuers. US credit card issuers are pursuing two distinct strategies in light of the new regulations: innovation and re-pricing. Greater success is expected for strategies focused on innovative products such as JP Morgan Chases Chase Blueprint card, which allows card holders to finance some purchases while paying for other purchases in full. The trend toward debit in the US coincides with consumer deleveraging; outstanding card lending shrank by almost 6% in 2009, double the drop in gross card lending.Canada Since major operators Visa and MasterCard International first started courting debit issuers in Canada in 2008, Canada's

national debit operator, Interac Association, has moved toward shoring up its near-monopoly market share. Interac, currently a non-profit bank association that operates on a cost-recovery basis, has been in talks with Canada's Competition Bureau to change its status to a for-profit company since late 2008. Interac has emerged during 2009 with a clear strategy to defend its local market share. The system is increasing its value proposition to issuers through technology, including the nationwide roll-out of smart debit cards by 2012 and working toward contactless card implementation. In the face of attractive higher revenue potential for issuing banks through MasterCard and Visa debit platforms, Interac is also relying on its Canadian roots as part of its marketing strategy to both issuers and consumers. A strong merchant lobby in favour of Interac and support by legislators for Canadas home-grown debit brand will keep Interac the debit leader throughout the forecast period.

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Western Europe: Pre-Paid Leads Value Growth During Crisis As Western European consumers pull back on spending in 2009, growth in card payment value is shrinking. The value of card

payments as a percent of total consumer payments stagnated or fell in France, Spain, Italy and the UK in 2009, as consumers shifted away from credit and charge spending and even reverted to the comfort of cash payments over debit in some cases. Nonetheless, growth in card payments should recover quickly next year as the migration from cash to plastic continues across the region. In an era of shifting spending habits, pre-paid has emerged as a clear leader in value growth across Western Europe. Conversion of paper voucher programmes to plastic and revived interest in national e-purse schemes lead the category.


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Single European Payments Area Affects Cards Landscape Accelerated shifts in debit card portfolios were evident in

Western Europe in 2009 as the December 2010 deadline for the SEPA Cards Framework requiring the migration of all cards issued as well as infrastructure in the EU and ECC markets to be EMV-compliant and internationally functional continues to approach. Visas V-PAY and MasterCards Maestro debit platforms are beginning to gain share in formerly closed domestic Western European debit markets. Visa made a slight yet significant break into the German debit market in 2008 traditionally dominated by the national bank associations (ZKA) ec-Karte (now Girocard) gaining 0.4% of debit cards through issuers including DZ Bank and BW Bank. Italy and Belgium are proving more difficult for the V-PAY and Maestro platforms to break into. Both markets have strong national bank association debit networks similar to the ZKA that have been slower to implement SEPA card standards; Belgian and Italian banks have proven more reluctant to commit to the new platforms. Regional cross-border debit network challenger EAPS (Euro Alliance of Payment Schemes) has moved forward with its plans to link up national switching systems: as of spring 2009, the German and Italian debit POS systems had been officially connected, presenting a new challenger to V-PAY and Maestro. Pricing will be the deciding factor in which cross-border system wins out through SEPA; the lower licensing and processing costs of EAPS make it a long-term contender.

Visa Debit Transaction value share: 37.2% MasterCard Debit Transaction value share: 24.8% 44




45

Global Prospects



Consumer Spending Growth Resides with Developing MarketsDeveloping versus Developed Market Consumer Spending ClimateMetric Unemployment % (2009) Annual disposable income % growth (2009-2010) Consumer lending debt as % of annual disposable income (2009) China 4.2 9.3 Spain 17.3 -0.8 Consumer expenditure growth requires security -

47.9

122.4

Savings ratio % (2009) GDP % growth (2009-2010) Consumer expenditure % growth (2009-2010) Card Payment (excl Commercial) Volume % growth (2009-2010)

31.5 9.0 9.6

12.1 -0.7 -1.4

15.1

1.9

financial and psychological - and the capacity to act on it. The economic downturn has tipped both of these factors in favour of developing markets. However, while developing markets own the growth, they lack the scale. Developing markets offer a stronger foundation upon which to encourage consumer spending: lower unemployment, income growth and less debt. The comparison of China and Spain highlights the divide in security and capacity between developing and developed markets. Developed market consumers also seem distanced from the most unquantifiable of factors. At some point, consumers need to believe in the light at the end of the tunnel. Optimism the belief that things will improve sooner rather than later as a driver of consumer spending appears tilted strongly for developing markets. In 2009-2010, five out of the 44 researched markets are expected to exhibit negative growth in consumer payments. However, in three of the markets (Japan, Singapore and Colombia) card payment volume is projected to record positive growth. Conversely, in Israel and Switzerland card payment volume growth is expected to record higher negative growth than consumer payments. Israeli consumers appear positioned to shift to paper (cash and cheques) while electronic transactions record only positive growth of all Switzerlands consumer payment instruments.

46

Global Prospects



Developing Markets Capable of Additional Debt

47

Global Prospects



Major Developing Markets to Drive Spending in Near Term

48

Global Prospects



However, Developed Market Recovery NecessaryConsumer Expenditure US$ Per CapitaMarket Poland Russia Brazil Saudi Arabia South Africa China Vietnam India Developing Market Total USDeveloping market consumer in perspective... In order to equal the consumer spending of one US consumer,

Developed market cardholder in perspective2009 8,946 5,916 5,267 5,112 3,491 1,297 778 611 31,418 31,541 Developed market healing is critical to retest pre-crisis

one needs to sum the consumer expenditure of eight highgrowth developing market consumers. Over the 2004-2009 period, China posted the second highest CAGR in card payments. Even with the robust growth profile, it still takes roughly 23 Chinese cardholders to equal the card payment volume of one UK cardholder.

card payment volume growth. The US pre-downturn card payment volume growth rate was 10.8%, 2006-2007, followed by 5.1%, 20072008. In order for the US to resume 10.8% card payment volume growth Euromonitor International expects 8.5% in 2010, requires cardholders to transact an additional US$364 billion versus 2009. An additional US$76 billion in card payment volume would need to be added in 2010 on top of Euromonitor Internationals expected 8.5% growth rate to equal 10.8%. US$364 billion in card payment volume equals the entire card payment volume landscape of Brazil (US$226 bn), Mexico (US$44 bn), Russia (US$43 bn), Poland (US$30 bn) and India (US$9 bn). Chinas entire card payment volume market would need to grow at greater than 50% in 2010 to reach US$364 billion. The unlikely scenario of the US matching its10.8% predownturn card payment volume growth in 2009-2010 would add almost one percentage point of growth to the global card payment volume total (7.6% to 8.4%).

49

Global Prospects



Ultimately, Developing Markets Begin to Resemble Developed

Card Payment Volume Landscape 2014

Consumer Payment Volume Landscape 2014

Note: Developing markets selected according to International Monetary Funds World Economic Outlook Report, October 2009. Nineteen out of Euromonitor Internationals 44 researched markets are classified as developing versus 25 developed.

50

Global Prospects



Industry Driver Analysis (1)Industry Driver Future Impact through 2014 Impact Developing Markets Impact Developed Markets

Capacity for spend

Markets in which consumer debt levels are highest in relation to income will have reduced capacity to spend. Pay Before/Pay Now card categories will see higher growth in comparison to Pay Later products in these markets. Consumers with currently low debt levels and greater capacity to spend will, however, not spend over their income level in the forecast period due to a lasting shift in consumer mindset toward thrift, implying that Pay Before/Pay Now concepts will lead global growth in financial cards.

Economic recovery As global economic recovery renews consumer confidence, spending levels are expected to rise globally by 2011. Increased spending will spur growth in card payments even in the most cash-dependent markets as new consumer segments enter the financial cards fold. Renewed economic growth will accelerate the lift in annual disposable income for developing market consumers, who will be ever more likely to use cards for payment transactions. Regulatory pressure The global financial crisis put financial industry regulation in the spotlight around the world: the US Congress passed sweeping legislation on credit cards in 2009, while Australian and European regulators looked critically at financial cards. Regulatory pressure in Latin America will be led by Brazil going forward.51

Global Prospects



Industry Driver Analysis (2)Industry Driver Future Impact through 2014 Impact Developing Markets Impact Developed Markets

Infrastructure

Recent gains in infrastructure expansion will continue to accelerate through 2014 due to the spread of financial services to rural and remote areas. Consumer education will be the key to real growth in card payments driven by newly installed POS terminals. As more receptive consumers to new ideas and technology, youth will increasingly represent a major opportunity for innovative payments players. Youth represents roughly half of African and Middle Eastern consumers and over one third of Latin Americans. High-growth African and Middle Eastern travel destinations will experience growth in card payments as travellers resort to the security and portability of financial cards. Infrastructure growth in these markets will also benefit from tourists payment preferences. Urban populations in Middle East and Africa and Asia Pacific are expected to rise most rapidly in the forecast period. The new urban consumer will be more likely to be exposed to card payments, becoming a card user through growing entry points such as pre-paid transport. The expansion of chained retailers will continue to play an important role in the growth of card payments in developing markets. They will also form a significant part of payment players strategies in developed markets due to increased acceptance of co-branding.52

Youth

Tourism

Urbanisation

Chained retail expansion

Report Definitions



DefinitionsGeneral All values expressed in this report are in US dollar terms, using a fixed exchange rate (2009), except consumer expenditure data (2008). 2009 figures are based on Q1-Q2 2009 research and are, therefore, part-year estimates. All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical data are expressed in current terms; inflationary effects are taken into account. Consumer Finance Electronic Direct/ACH Electronic transactions include electronic funds transfers, wire transfers and direct debits. Other Paper This category includes checks (personal, teller, certified, cashier's), money orders and travelers cheques. Retailing Hypermarket Chained or independent retail outlets with a selling space of over 2,500 square metres and with a primary focus on selling food/beverages/tobacco and other groceries. Example brands include Carrefour, Tesco Extra, Gant, E Leclerc, Intermarch, Auchan. Excludes cash and carry, warehouse clubs and mass merchandisers. Internet retailing Sales of consumer goods to the general public via the Internet. Sales data is attributed to the country where the consumer is based, rather than where the retailer is based. Travel & Tourism Arrivals Refers to international tourists, ie any person visiting another country for at least 24 hours, for a period not exceeding 12 months, and staying in collective or private accommodation. Each arrival is counted separately and thus includes people travelling more than once a year and people visiting several countries during one holiday. Departures: Refers to the number of residents that travel abroad from their country of residence to another destination country for leisure or business purposes.

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Consumer Finance 2010 - Trends, Developments and Prospects