Few payment card markets are more developed than Australia’s: The average number of monthly card transactions, and the average annual spend per card are higher in Australia than in the US, the UK, Canada and Germany. Timetric’s analysts took a closer look at payments in the Great Southern Land
Australia’s payment cards market is one of the world’s most developed. In 2015, Australian payment cards accounted for 3.3% of the transaction value, and 7.6% of the transaction volume in Asia-Pacific. The average number of monthly card transactions, and the average annual spend per card are higher in Australia than in other
mature markets such as the US, the UK, Canada and Germany.
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Electronic payments have steadily grown in popularity in Australia, aided by the rising prominence and uptake of contactless technology. Issuers such as the Commonwealth Bank of Australia (CBA), National Australia Bank
(NAB) and Westpac offer payment cards with contactless technology, and the number of cards with contactless functionality increased more than fivefold from 7m in 2011 to 37m in 2015.
A key element in the rapid uptake was the introduction of contactless cards by multinational providers Visa and MasterCard, in moves to gain market share in Australia. In line with its international counterparts, domestic debit scheme provider Eftpos, supported by the Australian central bank, raised $41.3m ($40m) via the $0.01 fee scheme
introduced for all transactions in 2011, which was used to implement contactless technology and EMV migration.
Debit card payments continue to grow
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By GlobalDataPayment card product preferences changed during the review period (2011–2015), with a gradual shift in favour of debit cards.
Debit card transaction volumes rose from 3.5bn in 2011 to 5bn in 2015. The shift away from credit card use can be
explained by an increase in consumer avoidance of debt, and the RBA’s intervention to cap the debit interchange fee, remove surcharges on card transactions, and introduce the ‘honour all cards’ rule to allow merchants
to accept cards, which succeeded in changing the relative prices of using debit cards.
This resulted in increased debit card volumes during 2011-2015, a trend that is expected to continue over 2016–2020. The central bank has introduced several reforms to the credit cards market since 2003, including the cut in interchange fees. To compensate for revenue loss, banks increased annual fees on credit cards, and
made reward points and other benefits offered on credit card spending less generous. Card schemes provided banks incentives to promote cards with higher costs, but within the RBA’s rules.
Issuers responded positively, turning their attention to high-income consumers. New pricing strategies focused on upgrading gold cards to platinum cards, and offering more generous value-added services or rewards at
no additional cost.
Banks began to offer companion cards linked to two different credit card networks, allowing customers to earn benefits of whichever one they choose at the purchase point. As a result, companion credit cards have
increasingly replaced traditional single-card reward programs in major banks’ product lines; CBA, NAB, ANZ Bank and Westpac offer at least one companion card account as part of their premium card accounts.
Rise in uptake of alternatives
Consumers are increasingly using faster and more secure payments, and mobile operators,
traditional and online retailers, and other service providers are introducing alternative solutions. These include instruments such as Bpay, Paymate, MasterPass, Visa Checkout, ANZ Pay, NAB Pay and POLi.
The launches of global instruments such as Apple Pay, Android Pay and Samsung Pay are set to drive uptake of these solutions.
