With a large wealthy population and numerous high-value corporations, the Swiss payment card market is more mature than most. As a result, banks are looking to other segments for growth, while alternatives such as Apple Pay and Paypal are also gaining ground. Timetric’s researchers took a closer look
Switzerland’s payment card market is mature, and at two cards per inhabitant, penetration is high. Average annual spend per card is higher than in peers such as the Netherlands, Luxembourg, Belgium and Austria.
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The Swiss payment card market grew in terms of both transaction value and volume during the 2011-2015 review period, supported by infrastructure modernization, and growth in the retail, e-commerce and tourism industries.
The number of cards in circulation, transaction volume and value all rose, with respective review-period compound annual growth rates (CAGRs) of 3.69%, 11.27% and 3.57%, supported by a consumer shift from cash to card-based transactions.
The average transaction value on all payment cards fell during the review period, from $140.2 (CHF124.5) in 2011 to $105.3 in 2015, and is anticipated to decrease further over the forecast period, from $98.4 in 2016 to $91.2 in 2020. This reflects the continuing migration of low-value payments to cards, and the rising use of contactless.
Switzerland is host to numerous wealthy individuals and large corporates, and most banks offer private banking, wealth management and asset management services. Payment cards are often cross-sold as part of bundled offerings. In the matured market, attention is now gradually turning towards other consumer segments, and banks offer customized cards for students, young people, travellers, women and SMEs.
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By GlobalDataInterchange fee cuts encourage acceptance
To encourage card acceptance among Swiss merchants, Comco lowered the interchange fees for Swiss Visa and MasterCard credit cards from 0.95% to 0.70% in August 2015. It plans to further reduce the fee to 0.44% from August 2017, which will result in annual savings of $52-62.3m for merchants. No interchange fees are charged on Maestro debit cards.
All cards issued in Switzerland are EMV-compliant, and the majority have contactless technology. According to the central bank, the number of contactless cards was 7.1m in 2015; it is forecast to increase from 8.8m in 2016 to reach 14.2m by 2020, with banks and issuers keen to promote contactless technology. Retailers such as avec, Ikea, Jumbo, kkiosk, Coop, Migros, McDonalds, Spar and Starbucks accept contactless payments.
The introduction of the WISE solution in the framework of EMVI’16 is likely to complement initiatives to improve consumer convenience and payment security.
The new EMVI’16 chip specification enables Swiss banks and international issuing and processing customers of SIX Payment Services to offer secure contactless payments, combining EMV and contactless features.
The e-commerce market registered a review-period CAGR of 14.46% in terms of transaction value. While payment cards continue to be the most popular online payment method, alternative solutions such as PayPal, Apple Pay, MasterPass and Twint are forecast to challenge the dominance of payment cards in e-commerce.
PayPal expanded its One Touch instant checkout service to Switzerland in August 2015, enabling users to skip the login process at eligible websites to accelerate the payment process. Apple Pay, launched in July 2016, enables Visa and MasterCard credit cardholders to make remote in-app online payments.
MasterCard launched the MasterPass digital wallet in Switzerland in 2015. It allows consumers to store all cards, shipping and billing address details in single place, and use any of them to pay for online purchases.
