Chart of the Week: Australia card payments value to rebound 8.3% in 2021

The rising use of contactless and e-commerce payments will support the growth of the segment.

The value of card payments in Australia is set to rebound in 2021 after a slowdown in 2020 and rise by 8.3%, according to GlobalData’s Payment Cards Analytics.

With improving economic conditions and vaccination programs gathering pace, the card payments market is set to rebound and reach $577.3b (A$749b) in 2021.

Between 2021 and 2025, the value of card payments is forecasted to grow further and register a compound annual growth rate of 6.6% between 2021 and 2025 to reach A$967.9b (US$746.1b) in 2025.

“Australia has a developed card payment market with a strong payment infrastructure and high consumer preference for electronic payments. Australians are prolific users of payment cards, with a high frequency of card payments at 185 times per card in 2020,” said GlobalData Senior Payments Analyst Sowmya Kulkarni.

“Whilst the card payments market was affected in the short-run due to the pandemic, it is expected to rebound and continue its growth trajectory from 2021,” Kulkarni noted.

Growth will be supported by the rising usage of contactless cards and e-commerce payments, GlobalData said. The use of contactless cards is reportedly on the rise as even smaller merchants are now insisting on non-cash and contactless payments amid hygiene concerns arising from COVID-19. 

Supporting this, the limit for contactless card payment was increased from A$100 (US$77.08) to A$200 (US$154.16), effective April 2020.

Payment via mobile wallets with stored debit and credit cards are also gaining prominence in Australia, said GlobalData. Data from the Commonwealth Bank from March 2021 revealed that over 40% of the bank’s debit and credit card contactless transactions were made via mobile wallets.

Meanwhile, the drop in overall consumer spending during the pandemic has been offset by a rise in online spending, as wary consumers are staying home and using the online channel. 

“Payment cards are the major beneficiaries of this as they are the most preferred tool for e-commerce payments in Australia,” GlobalData said.

Amongst card-type payments, debit cards are reportedly the most preferred card type, accounting for 58.5% of the overall card payments value in 2021. Credit and charge cards account for the remaining 41.5% share.

However, not everything is la la land in the card payments market. The reduction in consumer spending amidst the pandemic adversely affected the credit and charge card payment segment, with value declining by 10.7% in 2020.

Changing consumer attitude towards credit card debt, and the growing prominence of alternate financing options such as buy now, pay later are also whittling away at their market share.