Debit card transaction values increased from $274.9 billion in 2010 to $315.3 billion in 2014, at a CAGR of 4.90%; while, the credit card transaction values recorded a CAGR of 4.00%, increasing from $179.6 billion to $196.9 billion during the same period.
Some of this changing preference away from credit card use can be explained by factors,
Debit cards continue to dominate in the Australian payments market
such as an increasing apprehension to indebtedness among consumers, and initiatives by the Reserve Bank of Australia to regulate interchange fees.
The intervention by RBA to cap the debit interchange fee, the removal of the surcharge on card transactions and restrict the ‘honour all cards’ rule to allow merchants to decline cards, succeeded in changing the relative prices of using debit cards. “As a result, this increased spending on debit cards during the review period – a trend anticipated to continue over the next five years,” says Timetric’s Analyst, Kartik Challa.
According to Timetric, in 2014, in terms of transaction value and volume, the Australian payment cards market accounted for a share of 5.1% and 11.2% respectively in the Asia-Pacific region. Moreover, the average number of monthly card transactions, as well as the average annual spend per card, are higher in Australia compared to other mature payment card markets such as: the US, the UK, Canada and Germany.
Contactless payments are picking up
Contactless cards have been issued in Australia since 2006 but a major push on the acceptance side only started in the second-half of 2010. The technology is starting to gain traction among banks, consumers and merchants. The number of contactless cards grew from 7.6 million in 2010 to 18 million in 2014. With the growth in the number of retailers accepting contactless payments, the number is expected to reach 33.9 million cards in 2019, the Timetric report finds.
“The technology is gaining prominence in the country as banks such as CBA, National Australia Bank (NAB) and Westpac are offering payments based on contactless technology. A key element in the rapid take-up of contactless payments was primarily due to the initiatives taken by the international scheme providers – Visa and MasterCard – to capture a larger share of the Australian payment cards market,” Challa says.
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