News & Views - Savantor

What is the future for the card market?

Monday, 16 November 2009

This time last year we suggested that the card industry was likely to see an increase in bad debt from credit cards as consumers were likely to use cards to pay off other debts and eventually default on the card debt.  According to PricewaterhouseCoopers, by the end of 2010 bad credit card debt levels in the UK could amount to 9% of all outstanding balances, compared to 6% at present.  A recent report by has come to a similar conclusion describing the UK card market as facing a 'ticking time bomb'.  Areas of interest in the report include:

  • As insolvencies and unemployment rise, card write-offs will inevitably increase shortly afterwards 
  • Balances on cards are growing, while transaction values fall, causing a double impact on issuer revenues
  • The value of transactions in 2008 fell below 2007 levels
  • The total number of transactions and average spend per transaction is decreasing
  • Consumers are also relying more heavily on cash
  • Card usage rates for debit are growing at a cost to credit
  • Datamonitor forecasts a 6.4% fall in the credit card market in 2009
  • The volume and value of credit card POS transactions will see a 7% drop over 2009 and 2010
  • Credit card use at ATMs will drop by 19.8% in 2009 and will not recover  

If these forecasts are to be believed then what strategies are Issuers developing to cope with this scenario?  Hopefully something other than increasing rates and introducing annual fees. 


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