Pestel Factors Affecting Credit Card Industry

1422 Words Mar 20th, 2012 6 Pages
The political and legal environment
In the aftermath of the credit crisis, governments and regulators are strengthening consumer protections and promoting the concept of responsible lending; new developments are being made with the customer’s interests in mind, ensuring that the customer is in control of their own finances,.
The Consumer Credit Act section 75 provides added protection to consumers, offered for transactions over £100. It is notable that higher earners, are among the financially savvy, are among the most likely to be aware of this cover. In an uncertain economic environment, using a credit card provides a sensible solution should something go wrong.
The sector has faced further regulatory pressure with the introduction of
…show more content…
In addition, on-going economic uncertainty continues to undermine consumer confidence which translates to consumers are less willing to expose themselves to debt. This has affected the U.K credit card market which has seen a fall in the number of cards in issue and a growing reluctance for consumers to maintain a credit balance.
There is added pressure for credit card issuers from trying to protect their product margins - whilst credit card rates have edged upwards over the last year, the bank rate remains at 0.5% during this period. Latest forecasts from the OBR expected the economy to grow more slowly over the next few years than previously predicted.
The Socio-demographic environment
Cardholders are increasingly using their cards as payment tools rather than as a form of borrowing. This reflects changes in British attitudes to spending and borrowing and the declining appetite for debt. There has been a shift within the wider payments market away from cash and cheques towards card payments whilst there is still a value for the flexibility and convenience which
Open Document