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

Like other EU countries, Luxembourg’s economy was damaged by the 2009 global economic crisis. Following strong economic growth from 2004, Luxembourg's economy contracted by 5.6% in 2009, but recovered gradually from 2010. 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 a 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. Use of cash is decreasing steadily due to growing preference for electronic payments, resulting in cash’s share being halved during the review period 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 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, 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 Europe. 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, consumers began to use credit cards more frequently to benefit from interest-free credit periods offered by banks. In terms of the number of cards in circulation, transaction volume and value, debit cards decreased during the review period; this trend is forecast to continue over the forecast period. In terms of the number of cards in circulation, debit cards accounted for 51.2% in 2009, reducing to 27.1% in 2013. In terms of transaction volume, the share decreased from 65.9% to 57.2%, while in terms of transaction value the share decreased from 61.3% to 51.6% during the same period.

Instead of solely depending on salaries, consumers moved to credit card payments in times of need, repaying when funds became available. During the review period, 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 record respective CAGRs of 5.11% and 4.48% in terms of volume and value.

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.

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. Use of cash is decreasing steadily 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 Europe. 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, with use of social media for enhanced product presentation. E-commerce supported increasing card penetration during the review period. With the rising 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 à 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, demand for web cards is expected to increase further over the forecast period, which will support growth in payment cards over the forecast period.

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 key market trends and growth opportunities in Luxembourg’s cards and payments industry.

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

• Gain insights into strategies used to market various card types in Luxembourg.

• Gain insights into key regulations governing Luxembourg’s cards and payments industry.

Companies mentioned

BGL BNP Paribas

Banque et Caisse Depargne del’ Etat Luxembourg

Banque Internationale à Luxembourg

Banque de Luxembourg

ING Luxembourg

Bancomat

MasterCard

Visa

American Express

Table of Contents

1 Key Facts and Top Events

2 Executive Summary

3 Payment Instruments

3.1 Current Payments Environment

3.2 Alternative Payment Instruments

3.2.1 Digicash

3.2.2 PayPal

3.2.3 Click2Pay

3.2.4 ClickandBuy

3.2.5 paysafecard

3.2.6 Skrill

4 Market Attractiveness and Future Prospects of Cards and Payments

5 Analysis of Cards and Payments Industry Drivers

5.1 Demographic Drivers

5.2 Economic Drivers

5.3 Infrastructure Drivers

5.4 Business Drivers

6 Emerging Consumer Attitudes and Trends

6.1 Market Segmentation and Targeting

6.1.1 Consumer cards

6.1.2 Corporate cards

6.2 Travel Spending

6.2.1 Outbound spending

6.2.2 Inbound spending

7 Payment Cards

7.1 Payment Cards Instrument Analysis

7.1.1 Number of cards in circulation by card type

7.1.2 Transaction volume by card type

7.1.3 Transaction value by card type

7.1.4 Personal vs commercial cards

8 Debit Cards

8.1 Debit Cards Market Analysis

8.1.1 Number of debit cards in circulation

8.1.2 Debit cards transaction volume by channel

8.1.3 Debit cards transaction value by channel

8.1.4 Number of debit cards in circulation by scheme

8.1.5 Debit cards transaction value by scheme

8.1.6 Debit cards issuers market shares

8.1.7 Debit cards comparison

9 Credit Cards

9.1 Credit Cards Market Analysis

9.1.1 Number of credit cards in circulation

9.1.2 Credit cards transaction volume by channel

9.1.3 Credit cards transaction value by channel

9.1.4 Number of credit cards in circulation by scheme

9.1.5 Credit cards transaction value by scheme

9.1.6 Credit cards issuers market share

9.1.7 Credit cards comparison

10 Commercial Cards

10.1 Commercial Cards Market Analysis

10.1.1 Number of commercial cards in circulation

10.1.2 Commercial cards transaction value

10.1.3 Commercial cards comparison

11 Regulations in the Cards and Payments Industry

11.1 Regulatory Framework

11.2 Anti-Money Laundering

11.3 Foreign Direct Investment Regulations

12 Card Fraud Statistics

12.1 Card Fraud Analysis

13 Card Issuers

13.1 BGL BNP Paribas

13.2 Banque et Caisse Depargne del’ Etat Luxembourg

13.3 Banque Internationale à Luxembourg

13.4 Banque de Luxembourg

13.5 ING Luxembourg

14 Card Schemes

14.1 Visa

14.2 MasterCard

14.3 American Express

15 Prepaid Cards

15.1 Prepaid Cards Market Analysis

15.1.1 Number of prepaid cards in circulation

15.1.2 Prepaid cards transaction value

15.1.3 Open-loop prepaid cards

15.1.4 Closed-loop prepaid cards

15.1.5 Prepaid cards comparison

16 Appendix

16.1 Tables

16.2 Methodology

16.3 Contact GlobalData

16.4 About GlobalData

16.5 GlobalData’s Services

16.6 Definitions

16.7 Disclaimer

List of Tables

Table 1: Luxembourg – Key Facts, 2013

Table 2: Regional Benchmarking of Luxembourg’s Payment Cards Instrument, 2013

Table 3: Cards for High-Income Consumers

Table 4: Cards for Frequent Travelers, 2014

Table 5: Cards for Students and Young Population, 2014

Table 6: Cards for Online Shoppers, 2014

Table 7: Luxembourg – Commercial Cards Comparison and Key Features, 2014

Table 8: Regional Benchmarking of Luxembourg’s Debit Cards Market, 2013

Table 9: Luxembourg – Visa Domestic Interchange Reimbursement Fees, 2014

Table 10: Luxembourg – Debit Cards Comparison and Key Features

Table 11: Regional Benchmarking of Luxembourg’s Credit Cards Market, 2013

Table 12: Luxembourg – Visa Domestic Interchange Reimbursement Fees, 2014

Table 13: Luxembourg – MasterCard Consumer Card and Commercial Card Interchange Fees, 2014

Table 14: Luxembourg – Gold Credit Cards Comparison and Key Features, 2014

Table 15: Luxembourg – Premium Credit Cards Comparison and Key Features, 2014

Table 16: Luxembourg – Commercial Cards Comparison and Key Features

Table 17: Luxembourg – Market Entry Strategies of Foreign Banks

Table 18: Regional Benchmarking of Luxembourg’s Prepaid Cards Market, 2013

Table 19: Luxembourg – Prepaid Cards Comparison and Key Features

Table 20: Luxembourg – Payment Instruments Transaction Value (EUR Billion), 2009–2013

Table 21: Luxembourg – Payment Instruments Transaction Value (US$ Billion), 2009–2013

Table 22: Luxembourg – Payment Instruments Transaction Volume (Million), 2009–2013

Table 23: Luxembourg – Number of Cards in Circulation by Card Type (Thousand), 2009–2018

Table 24: Luxembourg – Transaction Volume by Card Type (Million), 2009–2018

Table 25: Luxembourg – Transaction Value by Card Type (EUR Billion), 2009–2018

Table 26: Luxembourg – Transaction Value by Card Type (US$ Billion), 2009–2018

Table 27: Luxembourg – Personal and Commercial Cards Transaction Value (EUR Billion), 2009–2018

Table 28: Luxembourg – Personal and Commercial Cards Transaction Value (US$ Billion), 2009–2018

Table 29: Luxembourg – Number of Debit Cards in Circulation (Thousand), 2009–2018

Table 30: Luxembourg – Debit Cards Transaction Volume and Frequency by Channel, 2009–2018

Table 31: Luxembourg – Debit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 32: Luxembourg – Debit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 33: Luxembourg – Number of Debit Cards in Circulation By Scheme (Thousand), 2009–2013

Table 34: Luxembourg – Debit Cards Transaction Value By Scheme (EUR Million), 2009–2013

Table 35: Luxembourg – Debit Cards Transaction Value By Scheme (US$ Million), 2009–2013

Table 36: Luxembourg – Debit Cards Transaction Value by Issuer (EUR Million), 2009–2013

Table 37: Luxembourg – Debit Cards Transaction Value by Issuer (US$ Million), 2009–2013

Table 38: Luxembourg – Number of Credit Cards in Circulation (Thousand), 2009–2018

Table 39: Luxembourg – Credit Cards Transaction Volume and Frequency by Channel, 2009–2018

Table 40: Luxembourg – Credit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 41: Luxembourg – Credit Cards Total and Average Transaction Value by Channel, 2009–2018

Table 42: Luxembourg – Number of Credit Cards in Circulation By Scheme (Thousand), 2009–2013

Table 43: Luxembourg – Credit Cards Transaction Value By Scheme (EUR Million), 2009–2013

Table 44: Luxembourg – Credit Cards Transaction Value By Scheme (US$ Million), 2009–2013

Table 45: Luxembourg – Credit Cards Transaction Value By Issuer (EUR Million), 2009–2013

Table 46: Luxembourg – Credit Cards Transaction Value By Issuer (US$ Million), 2009–2013

Table 47: Luxembourg – Number of Commercial Cards in Circulation (Thousand), 2009–2018

Table 48: Luxembourg – Commercial Cards Transaction Value (EUR Million), 2009–2018

Table 49: Luxembourg – Commercial Cards Transaction Value (US$ Million), 2009–2018

Table 50: Luxembourg – Card Fraud (EUR Thousand), 2009–2013

Table 51: Luxembourg – Card Fraud (US$ Thousand), 2009–2013

Table 52: Luxembourg – Number of Prepaid Cards in Circulation (Thousand), 2009–2018

Table 53: Luxembourg – Prepaid Cards Transaction Value (EUR Million), 2009–2018

Table 54: Luxembourg – Prepaid Cards Transaction Value (US$ Million), 2009–2018

Table 55: Luxembourg – Closed-Loop Prepaid Cards, 2009–2018

Table 56: Key Definitions

List of Figures

Figure 1: Luxembourg – Payment Instruments Shares by Transaction Value (%), 2009 and 2013

Figure 2: Luxembourg – Payment Instruments Shares by Transaction Volume (%), 2009 and 2013

Figure 3: Luxembourg – Payment Cards Transaction Value and Growth, 2009–2018

Figure 4: Luxembourg – Total Population and Proportion Aged Over 65 Years (%), 2009–2018

Figure 5: Luxembourg – Nominal GDP Per Capita (US$) and Real GDP Growth Rate (%), 2009–2018

Figure 6: Luxembourg – Volume of ATMs and Penetration, 2009–2018

Figure 7: Luxembourg – Volume of POS Terminals and Penetration, 2009–2018

Figure 8: Luxembourg – E-Commerce Value (EUR Million), 2009–2018

Figure 9: Luxembourg – Cards and Payments Industry Segmentation by Card Type

Figure 10: Luxembourg – Outbound Spending (EUR Million), 2009–2013

Figure 11: Luxembourg – Inbound Spending (EUR Million), 2009–2013

Figure 12: Luxembourg – Card Shares In Terms of Numbers in Circulation (%), 2009–2018

Figure 13: Luxembourg – Card Shares in Terms of Transaction Volume (%), 2009–2018

Figure 14: Luxembourg – Card Shares in Terms of Transaction Value (%), 2009–2018

Figure 15: Luxembourg – Personal and Commercial Cards, Transaction Value (EUR Billion), 2009–2018

Figure 16: Luxembourg – Number of Debit Cards in Circulation (Thousand), 2009–2018

Figure 17: Luxembourg – Debit Cards Transaction Volume by Channel (Million), 2009–2018

Figure 18: Luxembourg – Debit Cards Transaction Value by Channel (EUR Billion), 2009–2018

Figure 19: Luxembourg – Debit Cards Issuers’ Market Shares in Terms of Transaction Value (%), 2013

Figure 20: Luxembourg – Number of Credit Cards in Circulation (Thousand), 2009–2018

Figure 21: Luxembourg – Credit Cards Transaction Volume by Channel (Million), 2009–2018

Figure 22: Luxembourg – Credit Cards Transaction Value by Channel (EUR Billion), 2009–2018

Figure 23: Luxembourg – Credit Cards Scheme Market Share in Terms of the Number of Cards in Circulation (%), 2013

Figure 24: Luxembourg – Credit Cards Scheme Market Share in Terms of Transaction Value (%), 2013

Figure 25: Luxembourg – Credit Cards Issuers’ Market Share in Terms of Transaction Value (%), 2013

Figure 26: Luxembourg – Number of Commercial Cards in Circulation (Thousand), 2009–2018

Figure 27: Luxembourg – Commercial Cards Transaction Value (EUR Million), 2009–2018

Figure 28: Luxembourg – Shares of Various Types of Card Fraud in Terms of Transaction Value (%), 2009 and 2013

Figure 29: Luxembourg – Number of Prepaid Cards in Circulation (Thousand), 2009–2018

Figure 30: Luxembourg – Prepaid Cards Transaction Value (EUR Million), 2009–2018

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