From the credit crunch to the nation's debt crisis, debt and credit on a national and worldwide scale have been much discussed over the past couple of years, but dealing with personal levels of debt is the more pressing concern for most people.
With the global financial meltdown came a reassessment of personal wealth management, and the days of consumers merrily 'maxing out' their credit cards are a distant memory.
As austerity measures start to bite, inflation rises and job-security fears grow, people are focusing on cutting down their personal debt, and this has had an impact on the debitand credit-card market.
So although the number of transactions went up in the UK last year, the number of credit cards in use has declined, while debit-card use has increased. Debit cards allow people to keep a better tab on their spending compared with credit cards, and have benefited from the fall-off of cash and cheque transactions.
Although credit-card transactions have broadly held up, people are using them more as payment tools, rather than as a form of borrowing. In 2010 credit-card lending recovered after its 2009 decline and achieved an annual growth of 6%, to take it to £131bn, according to Mintel. It is estimated it will have grown by a further 3% by the end of this year.
Debit-card transactions have increased by 56% in volume over the past six years, compared with a 2% volume increase for credit-card transactions.
The lower revenue achieved by the credit-card providers, coupled with increased costs associated with default costs and legislation, has put pressure on their margins. They have tried to counter this trend by pushing up credit-card interest rates, despite the Bank of England base rate remaining at 0.5% during the past year.
Barclaycard has the biggest creditcard market share with 19%, according to Ipsos MORI. Although the leading high-street UK banks dominate the market, US card providers and retail brands also have a solid foothold.
Of the credit-card-scheme providers, MasterCard has a 58% share of cards issued, ahead of Visa on 35%, according to The Payments Council.
Lloyds Banking Group is the leading provider of current accounts in the UK, with 30% of the market (GMI data). Among debit cards, Visa is the dominant provider with 95% of all cards, either through its Visa Debit or Electron brands.
Innovation in this sector has expanded to mobile-payment systems and digital wallets. For instance, Barclaycard and Orange launched the UK's first mobile phone contactless payment service, called Quick Tap, in May. Customers with enabled handsets can 'tap' their phone against a secure reader to pay for goods that cost up to £15.
So far, 50,000 stores are signed up to the scheme, including sandwich chains Pret A Manger and Subway. Barclaycard users can also transfer up to £100 to their phone using the Quick Tap app.
Google and Visa are both working on rival digital wallets; Google Wallet has linked up with MasterCard for its version on Android-driven devices, which is due to be rolled out this year.
With more conventional cards, innovation has centred on incentives and reward schemes. As more customers have paid off their accounts in full each month, card providers have instead looked to encourage a greater number of transactions by rewarding regular use with points systems or cashback offers.
Barclaycard launched its Freedom rewards scheme in 2010; it covers 30,000 retailers, with 1.3m cardholders earning money through the scheme.
Trust in banks has not been high in recent years, and this has had a knock-on effect on cards. However, Barclaycard came out as the most-trusted in GMI research, while the more upmarket American Express has the most stand-out.
There is scope also to increase credit-card use: just 53% of adults have one, with 18- to 24-year-olds the least likely to hold one, according to Ipsos MORI research, with cash still the preferred option for small purchases.
Only 7% of adults and 9% of credit-card-holders have a card that offers contactless payments, which is being held back by security fears and limited take-up of the store-based technology among retailers.
Over the next five years, a steady increase is expected in the value of credit-card lending, with levels forecast to reach £163bn by 2016, according to Mintel.
