The lockdown and social distancing measures in Hong Kong due to COVID-19 has resulted in the closure of businesses and decline in consumer spending. As a result, card payments are estimated to register a subdued 1.2% growth this year, forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Cards Analytics, card payments market is expected to revive in the coming months with gradual reopening of businesses, easing of travel restrictions and potential launch of COVID-19 vaccine. The value of card payments is expected to increase at a compound annual growth rate (CAGR) of 3.9% between 2020 and 2024 to reach HK$1,241.7bn (US$159.4bn) in 2024.

Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “The global trade war followed by Hong Kong protests (also known as anti-extradition law movement) affected the country’s economy, a situation which further worsened by the COVID-19 crisis. The downturn in economic growth has affected consumers’ buying capacity and subsequently impacted card payment.”

Credit cards is the most affected of all the card types. According to the Hong Kong Monetary Authority, credit card transaction value (including card payments at POS and cash withdrawals) registered a 11% decline in Q1 2020 compared to previous quarter. Debit cards, on the other hand, saw marginal rise of 0.9% during the same period.

According to GlobalData’s 2020 Banking & Payments Survey*, while card payments have declined in Q1 2020*, there is a rise in contactless card payments. To encourage contactless payments, the government introduced subsidy scheme for merchants in October 2020. Under this scheme, a subsidy of HK$5,000 (US$641.93) is offered to merchants to cover the cost of setting up contactless terminals and maintenance fees.

Mr Reddy concludes: “Hong Kong has a well-developed card payment market and strong payment infrastructure. While the current COVID-19 has caused a slowdown in its growth in 2020, it simultaneously brought major change in consumer preference towards non-cash tools such as contactless cards, which will in turn support card payments growth  over the next few years.”

*GlobalData’s 2020 Banking & Payments Survey was carried out during Q1 2020. Over 43,000 respondents aged 18+ were surveyed across 44 countries.