7 Asia-Pacific countries set for card payment growth in 2022

Covid-19 has had more than just an impact on Asia-Pacific consumer spending in the last two years. The pandemic, and its consequent social restrictions to curb the spread, has also seen the card payments market in the region slow in terms of growth, as isolated consumers battled through harsh lockdowns and economic uncertainty.

Now, well into 2022, the APAC retail market is seeing a resurgence in consumer confidence, economic stability and even tourism, as governments loosen their grip on pandemic-related restrictions, thanks to vaccination and easing case numbers. Borders are also starting to reopen and within each APAC market, national initiatives are launching to encourage consumers to spend more, especially online, via their cards.

In 2022, card payments are expected to surge in value terms, as the region moves closer to becoming a less-cash, more digital society, thanks to the convenience and security of card payment systems in today’s shopping landscape.

Here are the seven Asia-Pacific countries set for big card payment growth in 2022.

Japan

Card payments in Japan are forecast to grow by 8.5 percent in 2022, according to research firm GlobalData, supported by strong economic recovery and rising consumer spending in post-pandemic Japan.

During the pandemic, Japan saw reduced consumer spending and travel restrictions negatively affect card payments in 2020, which registered a subdued growth of 1.9 percent for the year. A year later, a gradual recovery in the economy, supported by sporting events such as Tokyo Olympics, helped the market to rebound with 9 percent in 2021, said the research firm.

Japan’s government has also been pushing digital payments in the country in the last few years, with the intention to take cashless payments to 40 percent of the overall payment transactions by 2025. As part of the strategy, the Credit Card Security Guideline was released in March 2022 to prevent credit card fraud and boost cardholders’ confidence as a means for making purchases.

In addition to offering a secured payment, the initiative highlighted how card payments can provide more convenient and faster payments, fostering the growing adoption and usage of contactless payments in Japan, which is slowly shifting away from cash, especially for lower value transactions.

“Japan has been traditionally a cash-based country, with cash accounting for over two-thirds of the total payment transactions by volume,” said Sowmya Kulkarni, Payments Senior Analyst at GlobalData.

“However, payment cards’ usage has grown during the past few years, supported by government initiatives, rising consumer awareness of electronic payments and increase in merchant acceptance,” added Kulkarni.

Looking ahead, the Japanese card payment market is anticipated to increase at a CAGR of 7 percent between 2021 and 2025 to reach JPY 109.8 trillion ( USD 953.6 billion) in 2025.

Australia

The Australian payment card market is on the path of recovery this year post-Covid and is expected to grow at a similar rate to Japan, up 8.6 percent in 2022, supported by improved economic conditions and revival in tourism, according to GlobalData.

During the peak of the pandemic, reduced consumer spending, stringent lockdown and travel restrictions had affected card payments market in Australia, registering a subbed growth of 0.8 percent in 2020. However, a gradual recovery in the economy helped the market to rebound with a 10.3 percent increase in 2021.

“Australia has a well-developed card payment market with strong payment infrastructure and high consumer preference for electronic payments,” said Nikhil Reddy, Payments Senior Analyst at GlobalData.

“The market growth plummeted during the pandemic due to reduced card spending in sectors like travel and accommodation. However, with rise in consumer spending and travel restrictions being lifted, strong growth in card payment could be seen,” added Reddy.

During the pandemic, Australia implemented severe Covid-19 measures to control the outbreak, which saw its government ban citizens from traveling outside the country for almost 18 months. On 1st November, 2021, the restrictions were lifted, allowing fully vaccinated citizens and permanent residents to freely travel to and from Australia.

Furthermore, the government also opened its borders to international travellers from 21st February, 2022, pushing economic activity and boosting consumer spending, which in turn supported card payments growth.

Over the next four years, Australia’s card payment market is anticipated to increase further at a CAGR of 6.9 percent between 2022 to 2026, to reach AUD1.1 trillion (USD 785.2 billion) in 2026.

Hong Kong

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, according to GlobalData.

After a 14.7 percent decline in 2020, the card payments market in Hong Kong is expected to register a 6 percent growth in 2022 to reach HKD 940.2 billion (USD 120.6 billion), thanks to the reopening of businesses, easing of travel restrictions and an ongoing vaccination program.

By card payment type, debit card payment value is set to register a 6.9 percent growth in 2022 while credit and charge card payment value will grow by 5.5 percent during the same period, added the research firm.

“The payment card market in Hong Kong is mature with high card penetration of 3.4 cards per inhabitant and annual spending per card (HKD 4,394) (USD 559.75) in 2021 driven by its high financial literacy and well-developed payment infrastructure,” said Ravi Sharma, Lead Banking and Payments Analyst at GlobalData.

However, the card payments market registered decline in the past couple of years due to the global trade war, Hong Kong protests and then the Covid-19 pandemic.

“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,” added Sharma.

The Hong Kong government has been stimulating electronic payments in the territory via the introduction of a subsidy scheme in October 2020 to push contactless payment acceptance among merchants, benefitting around 12,000 sellers.

Looking ahead, the Hong Kong card payments market is expected to grow at a compound annual growth rate (CAGR) of 5 percent between 2021 and 2025 to reach HKD 1,079.7 billion (USD 138.5 billion) in 2025.

Australia

During the peak of the pandemic, reduced consumer spending, stringent lockdown and travel restrictions had affected the card payments market in Australia, registering a subbed growth of 0.8 percent in 2020. However, a gradual recovery in the economy helped the market to rebound with a 10.3 percent increase in 2021.

Over the next four years, Australia’s card payment market is anticipated to increase further at a CAGR of 6.9 percent between 2022 to 2026, to reach AUD1.1 trillion (USD 785.2 billion) in 2026.

Hong Kong

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, according to GlobalData.

However, the card payments market registered decline in the past couple of years due to the global trade war, Hong Kong protests and then the Covid-19 pandemic.

“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 a positive effect on the card payments market in coming years,” added Sharma.

Vietnam

The biggest growth market for card payments in APAC this year is Vietnam, according to GlobalData.

After being the only market in Asia to record card payment growth in 2020, up 2 percent, Vietnam’s card payments market is expected to register a strong growth of 24.1 percent in 2022, supported by robust economic recovery.

Able to control the spread of Covid-19 to a large extent, thanks to a well-developed public health system and comprehensive testing, tracing, and isolation measures, the Vietnamese economy registered GDP growth of 2.9 percent in 2020 and 2.5 percent in 2021, which reflected on the card payments market as well.

To encourage more of the Vietnamese population to join the country’s formal banking system and start using digital payments, the government in November 2021 approved a project for cashless payment development for 2021-25, with plans to increase the percentage of banked population, to 80 percent by the end of 2025.

Helping this cause, the central bank also mandated banks to issue only chip-based cards effective March 1, 2021.

“Vietnam has traditionally been a cash-based economy due to a low banked population, those aged 15 and above holding a bank account, which currently stands at around 33 percent,” said Nikhil Reddy, Payments Senior Analyst.

“The Vietnamese payment card market is expected to register strong growth in the next five years supported by government initiatives to increase banked population and adoption of electronic payments,” added Reddy.

Looking ahead, Vietnam’s card payments value is anticipated to increase further at a CAGR of 18.3 percent between 2021 to 2025, to reach VND 1,404.7 trillion (USD 60 billion).

Indonesia

Like most countries in the APAC region, Indonesia was adversely affected by the Covid-19 pandemic with the imposition of large-scale lockdowns and social distancing restrictions, resulting in the closure of businesses, which in turn saw card payments decline 22.4 percent in 2020. However, with the gradual improvement in economic conditions and vaccination program gathering pace, the card payment market grew by 8.4 percent in 2021 to reach IDR 559.9 trillion (USD 40 billion).

“The Indonesian payments card market registered sustained growth in the last few years. Although the Covid-19 crisis has hampered the growth trajectory, improving payments infrastructure and government initiatives will aid payment cards market growth over the next few years,” said Ravi Sharma, Lead Banking & Payments Analyst at GlobalData.

The government, in collaboration with the central bank, has been taking various initiatives to encourage payment card adoption and reduce dependence on cash. To offer secured payment experience and boost consumer confidence, all debit cards were migrated to the EMV standard before the central bank’s deadline of 31st December 2021.

In addition, the monthly interest rate charged on credit cards was capped at 1.75 percent effective from 1st July 2021, reducing from the previous rate of 2 percent, to encourage credit card usage.

“Indonesia, which is primarily a cash driven economy, made progress in the adoption of card payments in the past few years supported by government initiatives, increasing banked population, rising consumer awareness of electronic payments, and increasing merchant acceptance,” added Sharma.

Indonesia’s card payment market is poised for 10.7 percent growth, to reach IDR 619.5 trillion (USD 44.2 billion) in 2022.