Commercial cards represent the fastest-growing segment of the Western European payment card market, according to a new report from independent market analyst Datamonitor. The value of transactions carried out on commercial payment cards in Western Europe reached EURO87.1 billion in 2006, and is forecast to grow to EURO180.3 billion in 2011.

Datamonitor finds that the commercial card market in Western Europe is growing at a significantly quicker rate than the consumer market.  While it is forecast to grow at a compound annual growth rate (CAGR) of 16% for the period 2007-2011, the consumer market will show a CAGR of 8%. “The consumer sector in most of the big markets is saturated, with, for example, more than 2 cards per consumer already in issue in the UK” comments Andrew Fabricius, Financial Services Analyst at Datamonitor and author of the report. “Further to this, issuers of cards are quickly moving to take advantage of the bigger growth potential on the commercial side”.  Nonetheless, the commercial payment card market accounts for just 3.2% of payment card transaction values in the region.

UK has largest commercial card market and Turkey fastest growing

Reflecting its position as the biggest consumer card market in Western Europe, the UK also has by far the largest commercial card market, with transactions in 2006 worth €32.6 billion, far larger than France, the second largest market, at €12.9 billion, and Germany, at €10 billion.

“The large size of the commercial card market in the UK is due to the prevalence of this payment method across the market, partly as a result of a well developed acceptance infrastructure”, comments Andrew Fabricius. “In other markets, such as Germany, payment methods such as credit transfers are more popular amongst consumers and this is reflected in the commercial sector too. Likewise, in Italy, small businesses are far more likely to pay for goods and supplies with cash, reflecting the dominance of cash payments in this market”.

Meanwhile, Turkey is the fastest growing market for commercial cards in Western Europe, growing at a CAGR of 49.8% during the 2002-2006 period. However, the market remains small in absolute terms, being worth just €1.2 billion in 2006.

Source: Datamonitor

Patterns of use also vary significantly from market to market. In more developed markets such as France and Austria, commercial payment cards are used on average about 80 times a year, for transactions with an average value of around €100. On the other hand, Greece, Norway and the Netherlands typically have a high average value, low frequency of transaction pattern. This reflects the fact that in these markets commercial cards tend to be used for one-off, high value transactions, rather than on a day-to-day basis.

To the report: Commercial Cards in Western Europe