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Australia Cards & Payments Market Report

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  • Published Date: December 2021

AUSTRALIA CARDS AND PAYMENTS REPORT

A comprehensive overview of Australia's cards, payments and consumer banking market, with clearsighted commentary backed by relevant data and market forecasts to 2024.
Cash usage is declining in Australia, cards remain strong and BNPL is booming, with payments innovations a constant feature in recent and coming years.
A new national QR payment system offering a pay-by-account option at the POS made possible by the New Payment Platform presents exciting opportunities for ambitious entrants, although it will take well-informed strategy and savvy partnerships to find a place in a market so long dominated by the Big Four banks.

What you will learn from this report:

How the Australian payments infrastructure has been transformed.
What PayTo means for choice at the POS.
How issuers, despite interchange caps, are maximising revenue.
The market positions of BNPL lenders (with added data tables).

AUSTRALIA COUNTRY REPORT | KEY FACTS

  • The adverse economic impact of the pandemic was not as pronounced in Australia as in most other advanced markets.
  • Cash and cheques have continued to decline as a means of consumer payment, with hygiene prompting digital choices.
  • Credit card outstandings and purchase volume both suffered a significant decline during 2020. This led to profitability plummeting during the pandemic-afflicted 2020.
  • The credit cards market had been under some pressure even prior to the pandemic. Interchange regulation has resulted in less attractive rewards, which hit spending, while lending practices have come under scrutiny from regulators.
  • Issuers, who feel BNPL is eating into their market share of unsecured lending, have been offering interest-free instalment loan credit cards.
  • BNPL has been enthusiastically adopted in Australia, with the country serving as an international bellwether.
  • Although BNPL remains largely unregulated, an industry code of practice was announced in 2021.
  • Via the Osko service, mobile P2P grew significantly during 2020, as did mobile proximity payments (although to a lesser extent). Osko rides on the New Payments Platform rails.
  • The central bank has introduced least-cost routing for debit cards. This has contributed to the domestic scheme Eftpos stemming the decline in its share of purchase volume.
  • CBA and Mastercard have separately introduced cryptocurrency offerings.

Australia Payments Research | Report Contents

TABLE OF CONTENTS
Demographics and the economy
Payments environment
Cards market
Mobile payments
Profit pool
The networks
Key retail banks and issuers
Acquiring and processing
Online acquiring
Regulatory and other cards market information

Australia Country Report Data Tables
(All 2015-24F unless otherwise stated)

1: Demographic and economic indicators.
2: Ownership of key consumer devices.
3: Internet usage by population.
4: Access points: 2015-22F.
5: Account penetration.
6: Consumer payment trends.
7: B2C e-commerce payment methods: 2015-22f.
8: BNPL providers by number of merchants: 2017-22F.
9: BNPL providers by value of transactions: 2017-22F.
10: BNPL market leader positions: -
11: Total card payment metrics.
12: Contactless cards metrics.
13: Credit card numbers.
14: Total credit card metrics.
15: Credit cards profitability indicators.
16: Debit card numbers: 2015-2020.
17: Debit card metrics.
18: Prepaid/e-money cards metrics.
19: Mobile proximity payment metrics.
20: Mobile P2P payments: 2018-24F.
21: Profit pool: credit card numbers, billed volumes, outstandings, interest incomes, net interest revenues, merchant revenues, card fee revenues, other non-interest incomes, total revenues, net credit losses, operating expenses, total expenses, pre-tax profits, merchant service charges, rollover rates, APR, net credit losses to outstandings, operating costs to revenues, ROA (pre-tax profits to outstandings).

(All 2015-22F below unless otherwise stated)

24: Networks' credit card market shares.
26: Networks' credit card billed volume.
27: Networks' number of credit card transactions.
28: Networks' average credit card transaction value.
29: Credit card interchange fees by network.
30: Networks' debit card market shares.
31: Networks' debit card data numbers.
32: Networks' debit card billed volume.
33: Networks' number of debit card transactions.
34: Networks' average debit card transaction value.
35: Debit card interchange fees by network.
36: Key credit card issuers market shares by credit card numbers: 2017-22F.
37: Key issuers market shares in credit card outstandings: 2017-22F.
38: Key debit card issuers market shares by debit card numbers: 2017-22F.
39: Merchant acquirer credit card market share: 2021E.
40: Credit card merchant service charges: 2015-24F.
41: Merchant acquirer debit card market share: 2021E.
42: Debit card merchant service charges: 2015-24.F
43: Credit card issuer/issuing processor relationships: -
44: Credit card acquirer/acquiring processor relationships: -
45: Credit card issuing processor market shares by card numbers: 2021E.
46: Credit card acquiring processor market shares by the number of POS transactions: 2021E.
47: Online merchant acquirer market share. 2021E.

Australia Country Report | Selected Extracts

Demographics and Economy
The Australian market is very open, with minimal restrictions on the import of goods and services. This approach has helped increase productivity, stimulate growth and make the economy more
flexible and dynamic.

Payments Environment
The advent of the pandemic in 2020 accelerated Australians' migration from paper-based instruments to digital means of payment: cash and cheques have seen their percentage share of the value of consumer payments plummet since it began.

Cards market
Growth in debit card usage has outstripped that of credit cards during the years under review. The average growth rate for debit card purchase transactions from 2015 to 2020 inclusive was 13.6%, while the equivalent figure for credit cards was 5%.

Mobile Payments
Uptake of mobile proximity payments is not as developed as one would expect in an advanced payments market such as Australia: only some 2.9 million people availed of this functionality during 2020.

Profit Pool
The year saw a significant reduction in industry-wide pre-tax profitability: 26% less than the previous year. This was due to a reduction in credit card purchase volume of 11%, as well as a decrease in outstandings of 20%.

Card Networks
Australia has a competitive credit cards market, with five of the major international brands – Visa, Mastercard, American Express, Diners Club and UnionPay – having a presence. Most major banks in the market issue just one of Visa or Mastercard branded credit cards.

Key Retail Banks and Issuers
The retail banking market in Australia is dominated by the 'Big Four': Commonwealth Bank of Australia (CBA), Westpac, Australia and New Zealand Bank (ANZ) and National Australia Bank (NAB). Combined, they control some 68% of credit cards in issue at the end of 2021.

Acquiring and Processing
The merchant acquiring market in Australia is dominated by Commonwealth Bank, Westpac, ANZ Bank and NAB. However, this hegemony has slowly reduced over the years. The vast majority of processing is carried out in-house by banks, with third-party processing being limited by the tendency of Australian banks to outsource their entire IT infrastructure to full-service firms.

Online Acquiring
Total consumer B2C e-commerce spend is estimated to have reached $66 billion in 2021, with about three-quarters of the population shopping online. E-commerce transactions are characterised by a trend for seeking bargains, largely driven by the popularity of internet-based sales events.

Regulatory and Markets Information
The payments industry self-regulatory body AusPayNet is currently considering incorporating the EMVCo QR code specification into the rules that govern participation in various clearing systems in Australia, such as those for cards and bulk electronic clearing.

Australia Payments Report | Entities Referenced

ABS
ACCC
Adyen
AFIA
Afterpay
Albert
Alipay
Amber Group
American Express
Amex
ANZ Bank
Apple Pay
APRA
AusPayNet
Australia and New Zealand Bank
Australia Post
Australian Bureau of Statistics
Australian competition and consumer commission
Australian Finance Industry Association
Australian Payments Network
Australian Prudential Regulation Authority
Auswide Bank
Bambora
Bank of Australasia
Bank of Queensland
Bankwest
Bendigo and Adelaide Bank
Bendigo Bank
BigCommerce
Bitkub Capital Group
BOQ
BPAY
Cirrus
Citi Australia
Citibank
Citigroup
CoinJar
Coles
CommBank
Commercial Banking Company of Sydney
Commonwealth Bank
Cuscal
CyberSource
David Jones
Diners Club
Eftpos
EMVCo
eWAY
Ezidebit
First Data
FIS
Fiserv
Fitbit
Flex
G+D
Garmin
GE Capital
Gemini
Global Payments
Google Pay
Heritage Bank
HSBC
Humm
Illawarra Mutual Building Society
IMB Bank
IMF
ING
International Telecommunication Union
ITU
JCB
Klarna
Kogan
Latitude
Macquarie Bank
Mastercard
Members Equity Bank
MobileSecurity
NAB
National Australia Bank
National Commercial Banking Corporation of Australia
New Payments Platform
NPP
Openpay
Osko
PayPal
PayTo
Qantas
Quest Payment Systems
Rambus
RBA
Reserve Bank of Australia
Revolut
Samsung Pay
SecureCo
SecurePay
Square
St George Bank
StepPay
Stripe
Suncorp
Tyro
Verifone
Virgin Money
Visa
WeChat Pay
Westpac
Woolworths
World Bank
Worldline
Worldpay
Zip Money
Zip
ZipPay



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MORE ASIA-PACIFIC PAYMENTS REPORTS

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