Cross-Border Debit Card Spending Increases As European Consumers Embrace Borderless Economy

Following the launch of the Single Euro(pean) Payments Area (SEPA) MasterCard reveals European Maestro® debit transaction trends

At its 7th Annual Debit Conference today, MasterCard Europe revealed the emergence of a series of significant cross-border purchasing trends in Europe coinciding with the official launch of the Single Euro(pean) Payments Area (SEPA).

The usage of European Maestro debit cards1 for cross-border payments at retailers rose by 24% in 2007 compared to the previous year. Globally in 2007, European issued Maestro cards were used in nearly every one of the 210 countries and territories where Maestro cards are accepted.

As European consumers get into the habit of borderless shopping, growth at traditional debit card usage locations such as petrol stations is being joined by other categories including supermarkets (up 28% year-on-year in 2007) and clothing (up 30% year-on-year in 2007). This underscores Maestro’s value as a ’plastic Euro’ facilitating international trade through its use as a means to pay for everyday goods and services.

MasterCard’s analysis highlights the move by European consumers to cashless payments as seen by the increasing share of Maestro debit card transactions for purchases at retailers versus cash withdrawals at ATMs. In 2007, 42% of European Maestro debit card transactions were at merchant point-of-sale terminals, up from 37% in 2005. ATM cash withdrawals accounted for 58% of the transactions in 2007, down from 63% in 2005. Though these increased in absolute terms, they lost ground to cashless payments on Maestro cards signalling the development of a cash free future for European consumers and retailers.

France, driven in part by its traditional position as a preferred holiday destination for many Europeans, can be considered the nation at the center of European commerce as it accounts for the greatest percentage of Maestro transactions completed with foreign-issued cards.

“One trend we are noticing is a growth in the use of debit cards in neighboring countries. For example, Maestro spend by German consumers in major population centres along the country’s borders including Belgium, Austria, the Netherlands and Poland, is increasing rapidly - over two thirds (71%) of cross-border POS transactions on German issued Maestro cards being made to purchase petrol, clothing and food”, commented Eric Tomlinson, Senior Vice President, MasterCard Europe Debit.

“Historically cardholders have tended to use their debit cards when on holiday in southern Europe. However, while Maestro debit card transactions by foreign cardholders in these traditional holiday countries has continued to increase in absolute terms, the overall share of transactions decreased relative to those conducted in both local border as well as global destinations. The analysis revealed that this trend is repeated across the EU.”

Tomlinson added, “The analysis also shows that the idea of a Euro Zone only scheme, or EU only one, is already becoming outdated by market forces. As Europeans travel more globally, we see an increase in Maestro debit card usage outside the EFTA region. Countries like the U.S., Thailand, Brazil and Morocco each increased share of total usage of Maestro cards abroad versus traditional European holiday countries like France, Spain and Portugal.”

“With retailers and consumers actively being upgraded to international SEPA-compliant brands like Maestro, we are noticing a trend toward the development of distinct economic zones within Europe,” said Luke Olbrich, Vice President, SEPA Solutions, MasterCard Europe.

“A single market is already developing in Europe which shows that SEPA is not just about the 3%2 of transactions that take place abroad when people are on holiday. It can be truly instrumental in the creation of a single market with customers now moving freely across borders to carry out their day-to-day shopping, enjoying the benefits of the ’same card, same code, more convenience’ that they enjoy at home through the Maestro network.”

Concluding, Olbrich said, “A significant number of European banks are now in the final stages of upgrading the remaining national use only credit and debit cards to MasterCard® and Maestro. Based on the number of European bank cards currently providing these SEPA-ready solutions, it is clear that we are already delivering on the promise of a Single Euro(pean) Payments Area, with cardholders able to use credit and debit cards in the Euro Zone, across the EU, and indeed worldwide in the same way as they do at home.”