Chinese card payments market skyrockets

spike

Card payments in China have been on a sustained growth path for the last few years. While the growth has been somewhat affected by COVID-19, it is still forecasted to register a robust compound annual growth rate (CAGR) of 11% through 2023, while Australia is estimated to register a subdued growth of 1.9% in 2020 against the previous estimate of 5.3%..

An analysis of Payment Cards Analytics reveals that card payments registered a CAGR of 19.8%, rising from CNY55.0 trillion ($7.9 trillion) in 2015 to CNY113.3 trillion ($16.3 trillion) in 2019.

The COVID-19 pandemic affected card payments in 2020 and subsequently registered 7.1% annual growth. However, the market is forecasted to recover quickly and grow at a robust CAGR of 11.0% between 2020 and 2023 to reach CNY166.2 trillion ($23.9 trillion).

China introduced stringent lockdown measures quickly, which allowed the country to control the virus and limit transmission. This, along with the introduction of stimulus package of worth $829.95 billion, which is equivalent to 5.61% of GDP, has set the stage for a strong recovery.

China was the largest debit card market globally with an estimated 8.1 billion debit cards in circulation in 2020, driven by financial inclusion programs. Credit and charge cards, on the other hand, were much smaller at 0.82 billion in 2020. As a result, debit cards remain the most preferred card payment method, accounting for 57% of the total card payments by value in 2020.

The increase in consumer demand for credit, especially from the growing middle-class, has helped the growth of credit and charge card transactions during the review period. Credit and charge card payments increased at a CAGR of 19.3% compared to the 15.7% growth of debit cards during 2015–2020. As a result, credit and charge cards’ share in the total card payments value increased from 39.4% in 2015 to 43.0% in 2020.

Australian Woes

The Australian payment card market on the other hand, which has been on the rise for past few years, registered a marked slowdown in 2020 due to COVID with reduced consumer and commercial spending.

However, with gradual recovery in economic activities and growing preference for contactless payments, card payments are expected to rise.

An analysis of Payment Cards Analytics reveals that the value of card payments in Australia is estimated to register a subdued growth of 1.9% in 2020 against the previous estimate of 5.3%.

Card payments growth in Australia

However, with the gradual recovery of economy, the growth is expected to improve over the forecast period increasing at a compound annual growth rate (CAGR) of 5.7% between 2020 and 2024 to reach A$872.9 billion ($613.6 billion) in 2024.

Australia is one of the most developed contactless card markets with majority of the consumers using contactless cards. Due to the current pandemic, the use of contactless cards is on the rise as even smaller merchants are now insisting on non-cash and contactless payments.

To encourage the shift away from cash, the limit for contactless card payment was temporarily increased from A$100 ($70.30) to A$200 ($140.59) effective April 2020.

Payment companies are also coming out with innovative contactless POS solutions. In October 2020, Australia-based payment services provider Quest launched Airpay TAP app, which allows merchants to accept contactless card payments on Android devices without the need of additional card readers.

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