Hong Kong card payments market, which registered subdued growth in 2020 due to the COVID-19 pandemic, is expected to rebound with the gradual economic recovery, rise in consumer spending and the launch of COVID-19 vaccination program and grow at 4.4% to reach HK$1,112.5bn (US$143.5bn) in 2021, 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 marginal growth of 1.2% in 2020 due to the decline in consumer spending amid the COVID-19 pandemic. The market is expected to revive in 2021 with gradual reopening of businesses and easing of travel restrictions.

As a result, the value of card payments is forecasted to register a compound annual growth rate (CAGR) of 3.7% to reach HK$1,241.7bn (US$160.1bn) in 2024.

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. It also has a high annual spending per card driven by its robust payment infrastructure. Despite theis, the market growth decelerated in past two years due to the global trade war followed by Hong Kong protests (anti-extradition law movement) which affected the country’s economy. This was further worsened by the COVID-19 crisis, affecting card payment growth.”

With COVID-19 restrictions now being eased and consumer spending on rise, both debit and credit cards use is expected to increase. GlobalData’s Payment Cards Analytics reveals that the value of credit and charge cards payment is set to grow by 5.0% in 2021 while debit cards will grow by 3.3% during the same period.

The COVID-19 pandemic has brought a shift in consumer buying behavior with consumers moving from offline to online purchases. To capitalize on this trend, banks and card operators are offering customized cards to serve online customers.

For offline purchases, contactless cards are becoming popular in Hong Kong as they help avoid close social contact and prevents the spread of virus. To push acceptance of contactless payment among merchants, the government introduced subsidy scheme in October 2020 offering HK$5,000 (US$644.86) to merchants for covering the cost of setting up contactless terminals and maintenance fees.

Banks and payment service providers are also expanding payment infrastructure to support growing size of electronic payments. For instance, payment services provider SoePay launched a SoftPOS payment acceptance solution in March 2021, which allows contactless payments acceptance with their mobile phone, without the need of any additional card reader.

Mr Sharma concludes: “Hong Kong has a well-developed card payment market and strong payment infrastructure. While the COVID-19 pandemic has caused slowdown in growth, it is set to rebound on the backdrop of rising consumer spending.”