11 Oct 2021
Posted in Banking
Card payments in Malaysia to reach US$80bn in 2025, forecasts GlobalData
Malaysian card payments market, which declined in 2020 due to the COVID-19 pandemic, is set to rebound in 2021 supported by gradual rise in consumer spending and reach MYR322.7bn (US$80.2bn) in 2025, says GlobalData, a leading data and analytics company.
According to GlobalData’s Payment Cards Analytics, the value of card payments in Malaysia recorded a decline of 4.9% in 2020. The lockdown and social distancing restrictions to contain the virus spread resulted in reduced consumer spending and closing of brick-and-mortar shops which affected card payments.
However, with improving economic conditions and vaccination program gathering pace, card payment is estimated to grow by 8.5% in 2021.
GlobalData forecasts the value of card payments to grow at a compound annual growth rate (CAGR) of 11.1% through 2025.
Ravi Sharma, Lead Banking & Payments Analyst at GlobalData, comments: “Malaysia made significant progress in the adoption of card payments in the past few years supported by increasing banked population, rising consumer awareness of electronic payments, and increasing merchant acceptance. While the market was affected due to the COVID-19 pandemic in 2020, it is expected to rebound as consumers shift from cash to non-cash payments to avoid getting infected.”
Credit and charge cards are the most preferred card type for payments in Malaysia primarily due to the reward benefits offered on these cards. They account for 66.5% of all card payments by value in 2021 while debit cards account for the remaining 33.5% share.
Despite the decline in overall card payments, debit card registered a growth of 13.6% in 2020 supported by the migration of cash transactions to debit cards and growing preference of debit card for contactless payments, as majority of debit cards in the country have contactless functionality.
Credit and charge cards, on the other hand, registered a decline of 11.2% in 2020. Lockdown and travel restrictions affected consumer spending on airline tickets, hotels, restaurants, and transportation, where credit and charge cards are mostly used. This has impacted credit and charge card spending.
Rise in contactless is an important factor supporting card payments growth in Malaysia. According to the Central Bank of Malaysia, contactless card transactions accounted for 50% of all card payments in 2020, up 33% in 2019.
Mr Sharma concludes: “The Malaysian payments card market registered sustained growth in the last few years. Although, the current COVID-19 crisis has hampered the growth trajectory, improving payments infrastructure, and rising demand for contactless and online payments will aid the payment cards market growth over the next few years.”