Skip to main content
Daily travel & tourism news portal for the Asia-Pacific market since 2012

Trends

Asia-Pacific credit and charge cards market to grow by 13.7% in 2022, forecasts GlobalData

Author: Theodore Koumelis / Date: Wed, 05/18/2022 - 10:55
245

Credit and charge card payments value in APAC (covering 18 countries) registered a compound annual growth rate (CAGR) of 14.3% from US$6.5 trillion in 2017 to an estimated US$12.7 trillion in 2022.

Credit and charge cards market in Asia-Pacific (APAC) is poised to register a significant growth of 13.7% in 2022, supported by recovery in economic conditions, rising consumer disposable income, and growing preference towards electronic payments, forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Cards Analytics, credit and charge card payments value in APAC (covering 18 countries) registered a compound annual growth rate (CAGR) of 14.3% from US$6.5 trillion in 2017 to an estimated US$12.7 trillion in 2022. It is expected to grow further at a CAGR of 9.5% over 2022-25 to reach US$16.7 trillion in 2025.

Nikhil Reddy, Payments Senior Analyst at GlobalData, comments: “The credit and charge card adoption in the region is much lower compared to its Western counterparts mainly due to low financial awareness and inadequate payment infrastructure across many markets. This is, however, gradually changing due to rising middle-income population, growing financial awareness, and banks offering lucrative benefits in terms of reward programs and instalment facilities.”

Reddy adds: “The credit and charge card payments in the region, which had been on a growth path for the past few years registered a decline of 1.5% in 2020 due to reduced consumer spending in the wake of the COVID-19 pandemic, as strict lockdown measures and travel restrictions were implemented to contain the pandemic.

“Almost all the major APAC countries have also now eased lockdown restrictions and opened their borders to international travellers. This will further push economic activities and positively contribute to consumer spending and support credit and charge card payments growth.”

The COVID-19 pandemic also highlighted the importance of non-cash payments. As people are avoiding cash to minimize their exposure to disease vectors, it is further accelerating the shift from cash to electronic payments, pushing credit and charge card usage.

The APAC credit and charge card payments market is dominated by China, which is expected to grow by 14.5% in 2022 to reach US$10.4 trillion. China is distantly followed by Japan with an expected card payments value of US$756.0bn, South Korea with US$705.9bn, and Australia with US$243.1bn in 2022.

In countries such as the Philippines, Indonesia, India, Thailand, and Vietnam, credit card adoption remains low. This is mainly due to low financial awareness, inadequate payment infrastructure, and the growing popularity of QR-based mobile payments.

However, these countries are also gradually pushing credit card adoption through various financial awareness campaigns as well as by introducing favourable regimes. For instance, the central bank of Indonesia capped the credit card interest rate at 1.75%, effective from 1 July 2021, reducing it in phases from 2.95% per month in mid-2017.

Meanwhile, the emergence of ‘buy now and pay later’ solutions in the region is posing a threat to the credit and charge cards market growth. These solutions are becoming a viable credit option, particularly among millennials, providing the flexibility to pay for their purchases at later dates in interest-free instalments and simple account opening procedures unlike the stringent credit card issuing and KYC norms followed by banks.

Reddy concludes: “The APAC credit and charge card market is expected to grow with a revival in economic activities, rising consumer spending, and growing preference for digital payments, and increasing consumer appetite towards credit. However, limited financial awareness and the reluctance of smaller merchants to accept credit cards due to associated costs will remain a key hurdle across many Asian markets.”

ABOUT THE AUTHOR

Theodore Koumelis

Co-Founder & Managing Director

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.