Overview 1
Catalyst 1
Summary 1
Table of Contents 2
Table of figures 3
Table of tables 4
Alternative Payments Are Gaining Ground in the UK 5
Contactless Payments Are Coming, But Not Yet 6
Definition of contactless payments 6
Contactless cards offer speed and convenience to consumers 7
The potential opportunity for contactless cards in the UK is up to £97.4 billion 8
Petrol sales provide the most potential for contactless payments in the UK 9
Contactless payments are being driven by Oyster and Barclays in the UK 11
Oyster proves that UK consumers are willing to use contactless ticketing 12
Barclaycard is the driving force behind UK contactless payment cards 14
Mobile Payments Are Focused on m-commerce and P2P Transactions 17
Mobile payments can be divided into P2P, m-commerce, and NFC payments 17
Mobile commerce and P2P applications are growing 18
Card issuers and MNOs in the UK are teaming up for a likely future push into mobile payments 19
Orange and Barclaycard are explicitly planning to launch mobile payments by 2012 19
O2 also has a card up its sleeve 21
Online Payments Are Dominated by Debit and Credit 23
Credit and debit cards account for 85% of online transactions by value 25
The most frequent online shoppers are the most likely to pay by credit card 27
Consumers spend the most on airlines and hotels, but shop more frequently for DVDs and games 29
The top quintile of consumers account for at least half of all online sales in nearly every merchant category 32
Convenience is more important than security when shopping online 33
Prepaid Cards Are Growing Beyond the Underbanked 37
Unlike other payment cards, prepaid cards typically require a program manager 37
Prepaid cards exist in a variety of forms, targeted at specific audiences and needs 38
Revenue streams for prepaid cards are based on fees and float interest 41
The UK prepaid card market is dominated by small- to mid-size players 42
Fraud remains a concern for the UK prepaid market 43
Mid-size banks and building societies are the largest issuers of prepaid cards in the UK 44
Appendix 49
Supplementary data 49
Online payments 49
Prepaid 53
Definitions 53
AAGR 53
APACS 53
Average transaction value 53
Balances outstanding 54
Bank of England base rate 54
CAGR 54
Charge card 54
Credit card 54
Debit card 54
Decoupled debit 54
Float 55
Prepaid card 55
Methodology 56
Primary research 56
Secondary research 56
Further reading 56
Ask the analyst 58
Datamonitor consulting 58
Disclaimer 58
List of Tables
Table 1: Consumer reasons for using different payment tools 36
Table 2: Number and value of prepaid card transactions, 2008 47
Table 3: UK prepaid cards by number of cards in issue by brand and issuing group 47
Table 4: Value of cash transactions by transaction value band (£m) 49
Table 5: Contactless opportunity by sector (£m and %) 49
Table 6: Proportion of consumers in the EU27 that have shopped online at least once in the last three months, 2008 50
Table 7: Reasons for not shopping online, UK and global average (%) 51
Table 8: Value of online transactions by payment tool and quintile (£m) 51
Table 9: Value of online transactions by merchant category and quintile (£m) 52
Table 10: Prepaid cards by brands and issuer (000s), 2008 53
Table 11: Current relevant publications, 2009-10 56
Table 12: Future relevant publications, 2010 57
List of Figures
Figure 1: The addressable market for contactless payments is £97.4 billion 9
Figure 2: Petrol sales alone have an addressable market for contactless of over £60 billion 10
Figure 3: The top four merchant categories in terms of opportunity could benefit from contactless payments 11
Figure 4: The Barclaycard OnePulse card uses the Oyster logo, and London imagery 14
Figure 5: Barclaycard is heavily marketing contactless to both consumers and merchants 15
Figure 6: Barclaycard and Orange plan to launch a mobile payment service by 2012 20
Figure 7: O2 has launched the most high profile mobile-related payment tool to date 22
Figure 8: The UK is the most advanced market for online shopping in Europe 24
Figure 9: Over 40% of consumers who do not shop online prefer to get their goods the same day 25
Figure 10: Credit and debit account for 85% of online transactions by value in the UK 26
Figure 11: Consumers spent £20 billion on their credit cards online in 2009 27
Figure 12: Consumers who shop online the most use credit cards for 48% of transactions by value 28
Figure 13: The top 20% of online shoppers account for 72% of all transactions by value 29
Figure 14: There were 839 million online transactions by volume in 2009 30
Figure 15: Videos/DVDs/games, music, and food and drink account for 54% of all online transactions 31
Figure 16: Consumers spent £18 billion on airline tickets and hotels online in 2009 32
Figure 17: The top 20% of consumers account for at least half of online sales by value in all categories other than music 33
Figure 18: Higher perceptions of security do not lead to a higher market share 34
Figure 19: High perceptions of convenience lead to a higher market share 35
Figure 20: Prepaid cards consist of three primary players: program managers, issuers and processors 38
Figure 22: Prepaid cards are often targeted at very specific needs 41
Figure 22: With the highest brand awareness, Virgin and PayPal lead the prepaid cards market 45
Figure 23: The prepaid cards sector is dominated by four issuers, accounting for 75% of the market 46
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