The Hong Kong card payments market, which was affected by the COVID-19 pandemic, is on the recovery path supported by the economic revival and rise in consumer spending. As a result, it is expected to register a 6% growth in 2022 to reach HKD940.2bn ($120.6bn), forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Cards Analytics, the value of card payments in Hong Kong registered a significant decline of 14.7% in 2020 due to decline in consumer spending amid the COVID-19 pandemic. The market is recovering gradually supported by the reopening of businesses, easing of travel restrictions and ongoing vaccination program.

The card payments value is expected to grow at a compound annual growth rate (CAGR) of 5% between 2021 and 2025 to reach HKD1,079.7bn ($138.5bn) in 2025.

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “The payment card market in Hong Kong is mature with high card penetration of 3.4 cards per inhabitant and annual spending per card ($4,394) in 2021 driven by its high financial literacy and well-developed payment infrastructure.”

However, the card payments market registered decline in the past couple of years due to multiple factors including the global trade war, Hong Kong protests (also known as anti-extradition law movement) and then the COVID-19 pandemic.

Sharma adds: “While the pandemic led to a decline in the overall consumer spending, it resulted in a significant shift in consumer preferences towards the use of non-cash methods of payment, which is expected to have positive affect on card payments market in coming years.”

GlobalData’s Payment Cards Analytics reveals that debit card payment value is set to register a 6.9% growth in 2022 while credit and charge card payment value will grow by 5.5% during the same period.

Apart from stimulus package to support businesses, the government has been taking various initiatives to drive electronic payments in the country. One such initiative is the introduction of a subsidy scheme in October 2020 to push contactless payment acceptance among merchants. This was aimed to benefit around 12,000 merchants.

Likewise, to drive banking penetration as well as to push consumer spending, the government launched ‘ cash payout’ scheme in June 2020, which ended in December 2021, under which individuals aged 18 and above were eligible for HKD10,000 ($1,283) which were deposited in their bank account electronically or via cheque.

Payment companies are playing their part in the wider objective of the promotion of digital payments. American Express, for instance, launched ‘Amex Shop Small’ campaign in July 2021, the sixth year in a row, to drive consumer spending at smaller local businesses and help them recover from the pandemic. Card holders could earn cashback of up to HKD500 ($64) on spending at any of 24,000 local online and offline merchants.

Sharma concludes: “Hong Kong has a well-developed card payment market and strong payment infrastructure. While the COVID-19 pandemic disrupted its growth trajectory over the past couple of years, it is set to rebound with constant government support, and rising consumer spending.”