What is your research methodology (interviews, questionnaires, desk research)?
In developing our industry research and analysis we use a tried-and-tested methodology, examining:
- key primary national and international sources;
- central banks, bank associations, and national statistics divisions;
- supranational organisations;
- published data from key players within the industry;
- annual reports;
- investor presentations; and
- secondary sources to assist with data gaps resulting from the private or confidential nature of certain information.
Underpinning and differentiating our methodology, we confirm this research and identify market splits through in-depth, proprietary interviews with senior industry executives and experts to produce authoritative intelligence combining the latest data with clear, objective analysis.
Our role as a leading provider of information and advisor to the industry accords privileged access to key personnel.
What factors do you take into consideration when making estimates?
Making estimates or forecasts is as much an art as it is a science. Because forecasting market adjustments is more than just manipulating a spreadsheet, it requires that our researchers develop a strong in-depth knowledge of the subject matter, tap the right industry insiders for their wealth of knowledge and take a holistic approach to the challenges of prediction.
In short, we factor in anything that is relevant or that we feel will influence the future composition of our data. This may be macroeconomic or demographic factors, vital industry changes (such as regulation or technology adoption), or simply small behavioural changes amongst consumers that our research team have identified.
How often do you update your research?
Verisk researches payments markets globally that have been prioritised according to current economic trends and client requirements. Markets are tiered and are updated accordingly.
What is the Profit Pool?
The Verisk Financial Research profit pool calculation is a unique set of data compiled by our research team. The aim is to estimate specific profitability relating to the credit cards market outside of other banking operations. By using the same method across all markets, this consistent approach means that markets are directly comparable.
How do you collate data for your profit pools, and does your profit pool include both issuers and acquirers profits?
The profit pool data derives from all key metrics found throughout each country report, as well as several additional metrics to help us measure key inputs (for example, merchant revenues, interest revenues, card fee revenues and other non-interest revenues, such as late fees and ATM charges) as well as outputs such as operating costs and net credit losses. We are then able to estimate pre-tax profits and profit per card.
What is included in merchant revenue in your profit pool calculations?
Merchant revenue includes merchant service fees charged by acquirers (shared by acquirers, issuers and networks)
What is included in other non-interest income?
This figure includes all other income issuers receive in addition to interest, annual fees and merchant service charges (e.g. cash advance fees, currency exchange fees, statement fees, merchant subsides and so on: fee categories may vary from market to market).
What is meant by 'rollover rate'?
We refer to rollover rates as a percentage of both billed volume and of outstandings. The first is a percentage of total card spend volume ($) that goes into a revolving balance and accrues interest. Rollover rate – as a percentage of outstandings – refers to total card outstandings/receivables volume ($) that goes into a revolving balance and accrues interest.
Do your card numbers refer to number of accounts or the actual plastic cards in circulation?
In most cases it refers to number of actual plastic cards; in some cases, it refers to number of accounts (clarified in pertinent table notes). In markets where multifunction cards are common, we sometimes report by function. In this scenario a single plastic card may be counted separately as both a credit and debit card.
What is the difference between 'billed volume' in the Cards Market section and 'billed volume' in the Acquiring and Processing section?
Billed volume in the cards market section refers to the total billed volume on cards issued within the country. It will therefore include card spend inside the country on locally issued cards, but also internationally by local cardholders travelling abroad.
Acquired billed volume is the total amount of point of sale transactions made at merchants within the country through the merchant acquiring network. This will include transactions on cards issued locally within the country and used within the country, but also from cards used by foreign tourists and businesspeople travelling to the country.
Can you define credit/debit card billed volume?
Credit/debit card billed volume is the total amount of value spend made on a card in a given period. In our database we measure this over a yearly period. It will include purchases made on a card at the point of sale and cash withdrawn from ATMs. For credit cards, it will also include any cash loans granted to credit card holders and instalment loan purchases.
What are credit card outstandings?
Credit card outstandings are the total amount of outstanding debt borrowed on a credit card measured at a point in time.
What are net credit losses?
Net credit losses can be defined as the proportion of the credit card outstandings that are written off by issuers. This is different from the non-performing loans ratio where banks still expect to reclaim some of the defaulting debt.