The Australian payment card market, which has been on the rise for past few years, registered a slowdown in 2020 due to COVID-19 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, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s 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%. However, with the gradual recovery of the 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$872.9bn (US$613.6bn) in 2024.
Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “Australians are prolific users of payment cards, with the frequency of card payments at 172 times in 2020, one of the highest in the Asia-Pacific region. The shift from low-value cash transactions to contactless card payments is supporting this growth.”
Australia is one of the most developed contactless card markets with the 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 the Airpay TAP app, which allows merchants to accept contactless card payments on Android devices without the need of additional card readers.
Mr Reddy concludes: “The COVID-19 outbreak has hampered the growth of the payments market in the short-run in Australia. However, it is expected to grow at a robust pace over the next four years, supported by a well-developed payment infrastructure and high contactless adoption.”