The survey, conducted for iE by Byline Research, finds that three quarters of card issuers in the UK continue to regard online services as critically important both in generating sales and in building relationships with the customer.

Most issuers say their plans to invest in e-business have not been affected by the present economic climate and the bursting of the dot.com bubble, and in a fifth of cases spending has actually risen.

The study reveals that while issuers continue to use low-interest rates, cash-back schemes and other gimmicks to win customers, they recognise that they do little to secure loyalty or long-term profitability.

Helen Clulow, director of cards for iE, notes: "Product discounting cannot go on forever. By moving the battle to the Internet, issuers see a way to increase sales and keep customers onboard for longer by offering them a wider and richer selection of services.”

More than half of the respondents (53%) believe that online card services stimulate offline spending as well as Internet-based transactions. The report states: “Egg, Smile, and marbles are all products that would not exist but for the Internet. Between them, these brands are responsible for a significant increase in competitive activity on and off the Web.”

Egg currently has 2 million cardholders and about four per cent of the UK market.

Helen Clulow concludes: “Online services play only a modest part in attracting customers, but are vitally important in keeping them in the fold...For the established players, the issue is how to leverage existing investments in technology. System integration problems and cost are still the biggest barriers to online services.”