Credit Cards - Denmark
HEADLINES
- In 2010 number of credit cards continues to increase to
reach 1.3 million
- Transaction volume increases by 8% to reach 70 million
transactions while transaction value increases by 5% in current terms to
DKr41.9 billion
- Credit card industry in Denmark remains underdeveloped,
accounting for only 70 million transactions compared to 944 million debit
card transactions
- Average transaction value continues to fall, from
DKr613 in 2009 to DKr599 in 2010, as Danes are using their credit cards
more frequently and for smaller purchases
- MasterCard the leading operator with a retail value
share of 76%
- Credit card transactions expected to grow at a volume
CAGR of 8% to 100 million while transaction value set to post a CAGR of 3%
in constant terms to reach DKr49.4 billion by 2015
TRENDS
- The global financial crisis cast a negative view on
credit and credit cards which affected year-on-year growth in credit card
transactions. In 2009, transaction volume declined by 5% while in 2010 it
has risen by 8%. This growth is low considering how small the credit card
segment in Denmark is.
- Credit card issuance has been less affected by the
global financial crisis, with slower but positive growth in both 2009 and
2010.
- The economic downturn has not significantly impacted
the balance between debit and credit cards. It has, however, impacted
credit card momentum and as such credit cards will grow slower over the
forecast period as a result of the financial crisis and debit cards
slightly faster. This is the result of both consumers being more wary of credit
cards but also credit card issuers having high set the bar higher and
making it more difficult to obtain a credit card.
- Credit card purchases would appear to have been put on
hold as people are acquiring credit cards at a faster rate than the
increase in transactions.
- There are approximately 131,400 commercial credit cards
in Denmark, and transaction volume has increased by 3% in 2010 to reach
nearly four million transactions, worth a value of DKr2.8 billion.
Commercial credit cards saw only slow growth in volume towards the end of
the review period. This is a largely mature area and with companies
increasingly focused on cost efficiency due to the economic downturn, many
introduced restrictions on their employees' use of company credit cards.
In Denmark, it is difficult for companies to obtain tax deductions linked
to the use of commercial cards.
- There are approximately 1.2 million personal credit
cards in Denmark. Transaction volume has increased by 8% in 2010 to reach
nearly 66 million transactions, worth a value of DKr39.1 billion. Almost
all financial institutes in Denmark offer customers credit cards as part
of their loyalty package, including not only established banks but also
smaller financial companies. These credit cards are often easy to acquire
but very costly to use. However, with increasing difficulties in obtaining
loans towards the end of the review period, many opted for credit cards
instead.
COMPETITIVE LANDSCAPE
- MasterCard is the leading operator in credit cards with
a share of 77% in terms of card numbers and 76% in terms of transaction
value.
- Visa saw the biggest increase in share in both 2009 and
2010 as this is still a relatively new product. The first Visa credit card
in Denmark was available in 2006. Visa held a 10% share in 2009 in
personal credit cards, up from 9% in 2008.
- In terms of issuers, Danske Bank Group led in 2009 with
a 35% volume share, followed by Nordea Bank with 24%. Both slightly lost
share in 2009 while Jyske Bank A/S, Sydbank A/S and Ekspres Bank A/S all
slightly gained share. Consumers perceive smaller banks as being more
personal and providing better customer service. It is also often easier to
obtain credit from smaller banks.
- Ekspres Bank A/S increased its share thanks to its new
Visa credit card brand. Operators focused their marketing on special
features such as bonus points or air miles. American Express has a premium
profile in Denmark and its marketing focus is on exclusivity.
PROSPECTS
- Over the forecast period credit card transaction volume
is expected to grow at a CAGR of 8% to reach 100 million transactions,
while transaction value is expected to post a CAGR of 3% in constant terms
to reach DKr49.4 billion.
- Personal credit cards will grow much faster than
commercial credit cards in terms of both cards issued and number of
transactions. Personal credit cards are becoming more popular and common
and a strong increase in personal cards will eventually lead to an
increase in transactions although many cards are expected to remain unused
due to high APRs and market uncertainty. Consumers are furthermore also
using credit cards increasingly for everyday use, although in 2009 they
opted to pack away their credit cards and pay down credit debt instead.
- Commercial credit cards is a more mature segment in
Denmark and the number of cards issued is far lower than that of personal
credit cards. As companies issue increasingly more credit cards to less
senior staff average volume transaction per card and average value per
transaction are decreasing.
- MasterCard is expected to lose some share over the
forecast period as Visa gains a foothold in the credit card industry in
Denmark.
- The credit card is expected to remain a niche product
over the forecast period, especially after the global financial crisis
that has made people more wary of debt and credit cards.
- The Danish financial cards market will continue to
develop and more resemble that of neighbouring markets. Companies expect
that credit cards will eventually become more common and as such we can
expect increased marketing of credit cards as markets recover.
- MasterCard, with a 77% volume share of overall credit
cards in Denmark, has the best platform from which to increase its credit
card transactions.
