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The market for bank cards in Europe by horizon 2018: What market share for new entrants?

The bank card is the most frequently used instrument of non-cash payment in Europe covering close to 40% of all transactions. Its growing success comes from its high degree of simplicity and its speed of use. This simplicity for the consumer masks, however, complex circuits of payments that are poorly interoperable between different national schemes. By introducing the SEPA Cards Framework, Europe intends to open this uncompetitive market and encourage the emergence of new pan-European players. In this context, Sia Partners has estimated that the rise of a new European bank card player is a feasible perspective and that at least 7% of market share can be captured by 2018.

The European bank card market

The bank card is the most frequently used instrument of non-cash payment in Europe covering close to 40% of all transactions. Its growing success comes from its high degree of simplicity and its speed of use. This simplicity for the consumer masks, however, complex circuits of payments that are poorly interoperable between different national schemes.

Europe is today a fragmented territory with multiple card schemes and weak interoperability between countries, explained by the apparition in the mid-80s of card schemes in a very disparate way and only on the national stage. Except for some Eastern European countries, all European countries have their own national card scheme - or even multiple - with their own rules and standards (security, processing...), which over the years lead to restricted market access for potential challengers. Besides domestic schemes (CB in France, Bancontact/Mister Cash in Belgium, Girocard in Germany ...) international actors (MasterCard and Visa notably) are also present in Europe and offer cards that can be issued and accepted in all European countries. Therefore consumers in major European countries have cards "co-branded" with their national scheme for domestics transactions (representing over 95% of transactions in Europe), and an international scheme to make transactions outside the country of issuance of the card.

The bankcard market in Europe, which is highly value-creating (sometimes representing over 30% of fees charged by retail banks), is awaited to pursue its growth over the coming years, notably because of the decline of historic payment methods (cheques...) and the advent of new technologies using card systems (contactless payments, mobile payments, on-line payments...), as well as the many opportunities of innovation (security, functionalities...) for existing or new players.

Even though the market was until now not favourable to competition and market entry, different structural mechanisms of change will lead to a change in market share and market entry opportunities.

The SEPA Cards Framework (SCF)

As an initiative from European authorities to see the bank card market become fully interoperable and competitive, several structural factors are coming to upset market balance, by encouraging notably the emergence of new challengers in the coming years. This expected evolution is part of the global SEPA initiative to have an open and harmonized payments market in Europe. For card payments, this political will has been translated into a list of requirements and conditions for ensuring interoperability of domestic card across the entire single area: the SEPA Cards Framework (SCF), approved by the EPC (European Payments Council) in March 2006. This framework specifies how issuers, acquirers, card schemes and operators must adapt their activities to comply with the SEPA vision for card payments in Europe, which is a market with no technical, legal or commercial barriers for cardholders, merchants and banks in their choice to use a specific payment card. In other words, the SCF, even if no implementation deadline has been set for current market players, is intended to foster competition and catalyse the emergence of new actors in the European bank card market. The three founding principles to be SCF compliant are:

  • Interoperability and security standards

The "EMV" standards are based on the use of the chip embedded in the card and a confidential code (PIN). This standard allows a general acceptance of the card regardless of the system used. To reach this objective, payment terminals and ATMs in Europe should all be EMV compliant.

  • Removing trade and territorial barriers

SCF compliant card schemes must ensure that no barrier prevents competition amongst issuers, acquirers and processors. In other words, this means that a card scheme must be able to work with any bank or merchant of the SEPA zone, provide non-discriminating tariffs between domestic and cross-border transactions, as well as separate its governance and transaction processing activities.

  • Harmonization of data flow between different actors

This program of sharing standards used by all actors along the value chain also aims to harmonize the European market by bringing STP ("Straight Thru Processing") mechanism to ease automated processing of transactions and again, remove barriers to competition.

With the SCF, national card schemes face a considerable challenge in terms of modernization and interoperability to comply with European standards and provide an acceptance network for all Europe. Several evolution scenarios can be considered by national operators, each involving risks and investment costs, which may be incurred depending on the importance of the local card scheme.

Ongoing initiatives to create/impose pan-European card scheme

Currently, three major projects for a new card scheme in Europe are underway, each at different stages of progress: EAPS, Monnet, Payfair.

Founded in 2007, EAPS (Euro Alliance of Payment Schemes) is an alliance between six existing national schemes that treated nearly one million transactions in 2009 and approximately 1.8 million transactions in 2010. The EAPS alliance is not a new card scheme as such, but rather a scheme that connects national schemes participating through existing infrastructure that became interoperable.

Payfair, launched in Belgium in 2007, is an initiative aimed at building a new card scheme, independent from existing schemes and offering open governance. Compliant to SCF, Payfair is technically operational since pilot transactions have already been treated with retailers, and is now looking for partnerships with acquirers and issuing banks to ensure wide coverage and diffusion of its cards.

The Monnet project, aimed at building an entirely new European card scheme, was launched in 2008 by major French and German banks and has gathered now 25 participating banks. Although it is still on the development stage, feasibility studies and the active support of ECB and European Commission are encouraging the operational launch of the project.

Market evolution scenarios for 2018

Sia Partners has conducted a quantitative study over three plausible scenarios of evolution for 2018, leading to different results in terms of probability, growth, market positioning and distribution of market share.

  • Scenario 1 - SEPA for cards failure

This most pessimistic scenario results in a status quo in terms of market players on the European territory, as national card schemes continue to coexist with international schemes. But if some national systems may not, on one hand, comply with the SCF in a reasonable time by lack of investment or interest, or on the other hand, bring sufficiently innovative solutions, it seems likely that international schemes would recover some of domestic schemes' market share.

This situation corresponds to a failure of the SEPA project as European market will have to be shared between historical players and the role and place of international schemes in Europe will be strengthened, weakening even more Europe in the governance and control of its card market.

  • Scenario 2 - SEPA for cards relative success

The second scenario is the emergence of a new player in the European card schemes landscape, as ongoing initiatives such as EAPS or Payfair are solid alternatives actively supported by the European authorities that could compete with international schemes in the treatment of cross-border transactions in Europe in the next five years. Co-branded cards with national schemes and the new European scheme would be issued, supporting historic competitors in their growth. In this matter, the arrival of a new card scheme will try to distinguish itself from the mature actors in the market by offering more competitive rates with reliable and innovative services, such as contactless payments, broad card coverage and increased security, thereby grasping away some of the market power of the established players. Sia Partners believes that this capture of market share could even be intensified by the increasing use of bank cards as mean of payment , by taken into account the positive effects of increased competition on the market like better service, enhanced security, lower transaction costs...

Even if uncertainty remains about the strategic positioning of international schemes to face the threat of losing market share against a new European player, Sia Partners believes that a new card system in Europe could obtain up to 7% market share by 2018 facing current operators.

  • Scenario 3 : SEPA for cards success

The last scenario considers a successful implementation of the SEPA Cards Framework with the arrival of several new market entrants to compete with historical international schemes. Assuming significant reductions in costs related to the use of cards, a flourishing market with increased substitution effects with respect to the obsolescent means of payments and last but not least the gradual disappearance of domestic card schemes who cannot cope with scale economies and services offered, new pan-European players can expect a growing use of their scheme.

Under the optimistic assumptions for new entrants described above, this scenario envisages a stronger market growth that will be primarily captured by the new operators, assessed in an estimated market share of about 17% for the new entrants.


Under the effect of internal and external turmoil, the European market for bank cards will evolve in the coming years, leaving the possibility for new entrants to establish themselves as an alternative or complementary scheme. With respect to different market mechanisms in play as well as recent developments at European level, Sia Partners considers that the intermediate scenario is so far the most realistic by the horizon 2018. Therefore Sia Partners considers that the market share of new entrants will rise up to 7.1% within this period.


Sia Partners

In Scenario 2, Sia Partners assumes that the card market will annually grow at a rate of 6% throughout the reference period.

This scenario envisages a bull market where annual growth of the cards industry is projected at a pace of more than 7%.

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