European banks may need to rethink plastic cards
Continental European banks may need to rethink their plastic card offerings, adding new features such as loyalty programmes if they wish to maintain current revenues, says independent market analyst, Datamonitor, in its report, 'Payment Card Innovations for Europe'.
According to Datamonitor, continental European consumers are unfamiliar with the flexible card-based finance facilities that their UK counterparts are used to, with the majority of payment cards in Europe being debit cards. The main value proposition for pay-later products has been the fact that they can be used as a payment facility abroad - for which European banks have traditionally charged considerable annual fees.
The main problem However, debit cards across continental Europe have recently joined systems such as Maestro and Visa, which allow cross-border use, eliminating much of the rationale behind paying for other cards. Moreover, past inertia toward innovation has left many European banks facing strong new competition from consumer credit specialists, and from a number of UK and US market entrants.
Datamonitor suggests that the continental European banks may still have a fighting chance by educating young consumers about the possibilities of bank card credit. But, for the rest of their clientele, the banks must find entirely new reasons to have and use Visa or MasterCard pay-later products.
A possible answer Personalising cards through simple design tools and a new breed of loyalty programmes may well provide part of the answer to this problem.
One strategy is the targeted use of loyalty schemes. Coalition loyalty programmes such as Air Miles and Nectar have met with wide success across Europe. Datamonitor suggests that European consumers would also warmly welcome no-nonsense cash-back schemes (such as those offered by Halifax and Morgan Stanley Dean Witter in the UK). Egg's recent success on entry to the French market has also proven the appeal of cash-back schemes to the European consumer.