Luxembourg's Cards and Payments Industry: Emerging Opportunities, Trends, Size, Drivers, Strategies, Products and Competitive Landscape

Synopsis
Like other EU countries, Luxembourg's economy was damaged by the 2009 global economic crisis. Following strong economic growth from 2004 onwards, Luxembourg's economic growth contracted by 5.6% in 2009, but recovered gradually from 2010 onwards. Economic turmoil in the global financial markets and lower demand during the peak of the recession prompted the government to inject capital into the financial services sector and implement stimulus measures to boost the economy.

A favorable tax regime coupled with bank-privacy legislation enabled the financial services sector, especially the banking and insurance sectors, to become the growth leader. Consequently, Luxembourg's cards and payments industry thrived during the review period (2009-2013), which is anticipated to continue over the forecast period (2014-2018).

In 2013, credit transfer was the preferred payment instrument, having a substantial industry share of 98.1%, in terms of transaction value, while payment cards accounted for just a 0.5% share. The use of cash is continuously decreasing due to a growing preference for electronic payment methods, resulting in cash's share being halved during the review period, down from 1.5% in 2009 to 0.7% in 2013.

In terms of the number of cards in circulation, Luxembourg's payment cards (including debit and credit cards) registered a positive growth during the review period, recording a significant compound annual growth rate (CAGR) of 23.14%, increasing from 992,348 cards in 2009 to 2.3 million in 2013. In terms of transaction value, payment cards valued EUR10.2 billion (US$13.5 billion) in 2013, after registering a review-period CAGR of 10.60%.
Improved banking infrastructure, new product developments, a higher awareness of electronic payments and wider acceptance of payment cards at point-of-sale (POS) terminals were the key factors driving growth. The adoption of Europay, MasterCard and Visa (EMV) standards also supported the industry's growth.

In 2013, the average transaction value (ATV) in Luxembourg was US$121.0, which was the fifth highest in the European region. Greece recorded the highest ATV, with US$227.6, followed by Switzerland (US$156.6), Italy (US$141.2) and Germany (US$131.5). However, Luxembourg recorded the region's highest card penetration of 4.43 cards per inhabitant in 2013, followed by Norway (2.73), the UK (2.48), Sweden (2.38) and Belgium (2.04).

Prior to the eurozone crisis, consumers used debit cards more frequently at POS terminals. However, with uncertain economic conditions and increases in unemployment from 2009 onwards, consumers moved to use credit cards more frequently to benefit from the interest-free credit period offered by the banks. In terms of the number of cards in circulation, transaction volume and value, debit cards decreased during the review period, which is anticipated to continue over the forecast period. In terms of the number of cards in circulation, debit cards accounted for 51.2% in 2009, which reduced to 27.1% in 2013. In terms of transaction volume, its share decreased from 65.9% to 57.2%, while in terms of transaction value its share decreased from 61.3% to 51.6%, during the same period.

Instead of solely depending upon their salaries, consumers moved to credit card payments in times of higher need, paying it back when they have funds. During the review period, the use of credit cards increased significantly both in volume and value terms at CAGRs of 19.05% and 17.00% respectively. Over the forecast period it is projected to grow at respective CAGRs of 5.11% and 4.48% in terms of volume and value.
Summary
The report provides top-level market analysis, information and insights into Luxembourg's cards and payments industry, including:

 Current and forecast values for each category of Luxembourg's cards and payments industry, including debit cards, credit cards and prepaid cards

 Comprehensive analysis of the industry's market attractiveness and future growth areas

 Analysis of various market drivers and regulations governing Luxembourg's cards and payments industry

 Detailed analysis of marketing strategies adopted for selling debit, credit and prepaid cards used by banks and other institutions in the market

 Comprehensive analysis of consumer attitudes and buying preferences for cards

 The competitive landscape of Luxembourg's cards and payments industry
Scope
 This report provides a comprehensive analysis of Luxembourg's cards and payments industry.

 It provides current values for Luxembourg's cards and payments industry for 2013, and forecast figures for 2018.

 It details the different economic, infrastructural and business drivers affecting Luxembourg's cards and payments industry.

 It outlines the current regulatory framework in the industry.

 It details marketing strategies used by various banks and other institutions. 

 It profiles major banks in Luxembourg's cards and payments industry.
Reasons To Buy
 Make strategic business decisions using top-level historic and forecast market data related to Luxembourg's cards and payments industry and each market within it.

 Understand the key market trends and growth opportunities within Luxembourg's cards and payments industry.

 Assess the competitive dynamics in Luxembourg's cards and payments industry.

 Gain insights into marketing strategies used for selling various card types in Luxembourg.

 Gain insights into key regulations governing Luxembourg's cards and payments industry.
Key Highlights
 In 2013, credit transfer was the preferred payment instrument, having a substantial industry share of 98.1%, in terms of transaction value, while payment cards accounted for just a 0.5% share. The use of cash is continuously decreasing due to a growing preference for electronic payment methods, resulting in cash's share being halved during the review period, down from 1.5% in 2009 to 0.7% in 2013.

 In terms of the number of cards in circulation, Luxembourg's payment cards (including debit and credit cards) registered a positive growth during the review period, recording a significant compound annual growth rate (CAGR) of 23.14%, increasing from 992,348 cards in 2009 to 2.3 million in 2013. In terms of transaction value, payment cards valued EUR10.2 billion (US$13.5 billion) in 2013, after registering a review-period CAGR of 10.60%.

 In 2013, the average transaction value (ATV) in Luxembourg was US$121.0, which was the fifth highest in the European region. Greece recorded the highest ATV, with US$227.6, followed by Switzerland (US$156.6), Italy (US$141.2) and Germany (US$131.5). However, Luxembourg recorded the region's highest card penetration of 4.43 cards per inhabitant in 2013, followed by Norway (2.73), the UK (2.48), Sweden (2.38) and Belgium (2.04).

 Security developments in Luxembourg's online payment systems enabled the steady growth of e-commerce, along with the use of social media for enhanced product presentation. E-commerce supported increasing card penetration during the review period. The increasing number of online shoppers and growth in online retailing, banks are offering web cards for individuals who frequently buy products or services online. For instance, BGL BNP Paribas, BIL, Banque Internationale a Luxembourg (BL) and ING Luxembourg offer web cards for online transactions. As e-commerce is anticipated to at a forecast-period CAGR of 19.82% to reach EUR1.3 billion (US$1.8 billion) by the end of 2018, the demand for web cards is expected to further increase over the forecast period, which will support payment cards growth over the forecast period.