02 Mar 2021
Posted in Banking
Card payments in APAC will rebound strongly with 19.2% growth in 2021, forecasts GlobalData
Card payments in the Asia-Pacific (APAC) region, which registered a subdued growth of 1.0% in 2020 due to the reduced consumer spending amid the COVID-19 pandemic, are set to rebound strongly with 19.2% growth in 2021, forecasts GlobalData, a leading data and analytics company.
Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “Several APAC countries implemented strict lockdown measures and travel restrictions to contain COVID-19 pandemic. This resulted in decline in consumer spending and impacted card payments growth in the region.”
With government restrictions being lifted and vaccine distribution gathering pace, economic activities are gradually resuming. APAC countries are now set to witness faster recovery compared to their western counterparts. According to the International Monetary Fund (IMF) forecasts released in January 2021, China is expected to grow by 8.1% while India’s growth is pegged at 11.5% in 2021.
An analysis of GlobalData’s Payment Cards Analytics reveals that card payments are expected to grow at a compound annual growth rate (CAGR) of 15.4% between 2021 and 2023 to reach US$31.5 trillion in 2023.
Government initiatives will play a key role in pushing card usage in the region. For instance, India abolished merchant service fee on state-owned RuPay cards effective from 1 January 2020. Several countries have also increased the limit on contactless payments to encourage shift away from cash and towards cards for small value purchases.
While card penetration is on the rise in Asia, POS penetration is still very low as small businesses are reluctant to install POS due to their associated costs. India has POS penetration of 4.1 per 1,000 individuals in 2020, compared to 46.6 in the UK.
As Asia is home to large number of small and medium sized businesses (SMEs), payment companies are offering low-cost POS devises to make card acceptance affordable. For instance, in June 2020, Malaysia-based Hong Leong Bank launched Cashless Lagi Senang campaign, which offered merchants low cost mPOS terminals without monthly rental, setup fees and security deposit.
The usage of payment cards is being extended for transit and toll payments, which is further supporting its growth. In January 2021, Bangkok Expressway and Metro (BEM) in Thailand installed contactless readers at toll plazas, allowing commuters to make payments using contactless cards.
Rise in online shopping has also supported card payments as banks are aggressively promoting card usage by offering various rewards to customers. The proliferation of digital-only/challenger banks is pushing bank penetration in the region helping card usage. There are over 40 such banks operating in the region. For instance, Paytm Payments Bank, which was launched in November 2017, had issued over 58 million digital debit cards by June 2020.
Mr Reddy concludes: “The COVID-19 pandemic has affected card payments in the region. This is expected to recover quickly in 2021 supported by economic recovery, government initiatives, improving payments infrastructure and growth in e-commerce.”