Card payments in China have been on a sustained growth for the last few years. While the growth was somewhat affected by COVID-19 pandemic in 2020, it is forecasted to register a robust compound annual growth rate (CAGR) of 11% through 2023, says GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Payment Cards Analytics reveals that card payments registered a CAGR of 19.8%, rising from CNY55.0 trillion (US$7.9 trillion) in 2015 to CNY113.3 trillion (US$16.3 trillion) in 2019. The COVID-19 pandemic affected card payments in 2020 and subsequently registered 7.1% annual growth. However, the market is forecasted to recover quickly and grow at a robust CAGR of 11.0% between 2020 and 2023 to reach CNY166.2 trillion (US$23.9 trillion).
Kartik Challa, Payments Senior Analyst at GlobalData, comments: “Card payments in China witnessed robust growth during the past few years supported by the rising financial inclusion and improvement in payment infrastructure. While the economy was impacted by COVID-19 pandemic, it is gradually returning to near normalcy.”
China introduced stringent lockdown measures quickly, which allowed the country to control the virus and limit transmission. This, along with the introduction of stimulus package of worth US$829.95bn, which is equivalent to 5.61% of GDP, has set the stage for a strong recovery.
China was the largest debit card market globally with an estimated 8.1 billion debit cards in circulation in 2020, driven by financial inclusion programs. Credit and charge cards, on the other hand, were much smaller at 0.82 billion in 2020. As a result, debit cards remain the most preferred card payment method, accounting for 57% of the total card payments by value in 2020.
The increase in consumer demand for credit, especially from the growing middle-class, has helped the growth of credit and charge card transactions during the review period. Credit and charge card payments increased at a CAGR of 19.3% compared to the 15.7% growth of debit cards during 2015–2020. As a result, credit and charge cards’ share in the total card payments value increased from 39.4% in 2015 to 43.0% in 2020.
The COVID-19 pandemic and the subsequent economic slowdown forced individuals to spend prudently, which is expected to slow down credit card usage in the short-term. However, with the revival of the economy, credit card usage is expected increase during the forecast period.
Challa concludes: “China has a developed payment market with a strong payment infrastructure and high consumer preference for electronic payments. While the COVID-19 pandemic and the uncertainty associated with it impacted card payments, the resumption of business activities and recovery in consumer spending will bring it back on its high growth trajectory.”