Debit and contactless dominate Australian payments market

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, a 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,” says Timetric’s analyst, Kartik Challa

Debit card transaction values increased from $274.9 billion in 2010 to $315.3 billion in 2014, at a CAGR of 4.9 percent; while the credit card transaction values recorded a CAGR of 4 percent, 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, such as an increasing fear of indebtedness among consumers, and initiatives by the Reserve Bank of Australia (RBA) to regulate interchange fees.

The intervention by RBA to cap the debit interchange fee, to remove 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 5 years,” says Challa.

According to Timetric, in 2014, the Australian payment cards market accounted for a share of 5.1 percent and 11.2 percent of transaction value and volume respectively in the Asia-Pacific region. Moreover, the average number of monthly card transactions and average annual spent per card, are higher in Australia compared to other mature payment card markets such as the US, the UK, Canada and Germany.

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