The card payments market in China, which was affected by the COVID-19 pandemic, is expected to register a strong growth of 17 percent in 2022, supported by healthy economic recovery, forecasts GlobalData, a data and analytics company.
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“Card payments market in China, which registered robust growth over the past decade, was affected in 2020 due to reduced consumer spending and economic uncertainty in the wake of COVID-19. The government’s stimulus packages, as well as comprehensive testing and isolation measures, nationwide vaccination and reopening of businesses have laid the path to recovery,” commented Kartik Challa, Senior Payments Analyst at GlobalData.
According to GlobalData’s Payment Cards Analytics, the value of card payments is forecasted to register a compound annual growth rate (CAGR) of 13.2 percent between 2021 and 2025 to reach CNY222.3 trillion (US$34.0 trillion) in 2025.
With the COVID-19 restrictions now eased and consumer spending on rise, both debit and credit card use is expected to increase. Major sporting events such as the Beijing 2022 Winter Olympics and Paralympics are expected to further push spending, thereby benefiting card payments.
GlobalData’s Payment Cards Analytics reveals that debit card payments are set to register a CAGR of 14.8 percent between 2021 and 2025 while credit and charge cards will grow at a CAGR of 10.9 percent during the same period.
To drive consumption and push card usage, banks are offering flexible repayment options on credit cards in the form of installments. All the major banks including BOC, HSBC, and CCB offer an installment payment facility, allowing their credit card holders to convert their purchases into installments.
China, in collaboration with card issuers and schemes, took various measures to support card payments. One such initiative was the removal of upper and lower interest rate caps from 1st January 2021. This was previously between 12.78 percent and 18.25 percent. Interest rate can now be determined by the issuer and card holder through independent negotiation. This will encourage competition in credit card space and result in lower costs for credit card holders.
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“Undoubtedly, 2020 was a tumultuous year for many sectors and card payments was no exception. The market experienced its first contraction in 2020 after a decade of robust growth. However, with the economy bouncing back and consumer spending rising, the Chinese payment card market is once again ready to surge,” concluded Challa.