Payment Cards in Australia 2008

Payment Cards in Australia is an invaluable guide to one of the most important markets in Asia Pacific. The report provides statistics on market size, competitor market shares and acceptance. It also provides an overview of regulation, competitor activities, product innovation and market forecasts.

Report Highlights
At the end of 2007 there were 47 million general purpose payment cards in issue in the Australian market. Credit cards are the fastest growing card segment and recorded an average annual growth rate of 7.1% between 2003 and 2007. Debit cards recorded a 3% growth rate for the same period, while the charge card market grew by 3.8%.

In terms of card issuer market share, the Commonwealth Bank is the leading issuer of debit and credit cards when measured by cards in issue. However, Westpac is the leading player in terms of credit card balances outstanding.

The current economic climate will heavily impact the credit card market in Australia. However, under Datamonitor's neutral scenario, the value of credit card transaction values in Australia will reach A$361 billion in 2012. Under a more pessimistic economic view, transaction values will grow to only A$304 billion by the same point.
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Table of figures 5
Table of tables 6
Introduction 7
Scope of the report 7
Structure of the report 7
Market context 8
Introduction 8
Country overview 8
Demographics 9
Economy 10
GDP 10
Inflation 13
Distribution of income (Gini co-efficient) 14
Market size 15
Cards in issue 15
Number of transactions 16
Frequency of use 17
Transactions at the ATM and POS 18
Value of transactions 20
Average transaction value 21
Transaction values at the ATM and POS 22
Balances outstanding 26
Card acceptance 28
ATM statistics 28
POS statistics 29
Payment fraud in Australia 30
Debit card fraud in Australia 31
Credit and charge card fraud in Australia 32
Market structure 33
Banks 33
Building societies 34
Credit unions 34
Specialist credit card institutions 34
Regulatory environment 34
Industry regulators 34
Australian Prudential Regulation Authority 34
Reserve Bank of Australia 35
Australian Competition and Consumer Commission 35
Industry associations 35
Australian Payments and Clearing Association 35
Australian Bankers Association 36
Abacus - Australian Mutuals 36
Credit bureaus 36
Key issues 36
Fraud and EMV 36
Interchange fees 37
Credit card interchange 37
Debit card interchange 46
Competitor and product overview 50
Introduction 50
Card issuer market shares 50
Total card market 50
Total cards in issue 50
Total transaction values 51
Debit cards 52
Debit cards in issue 53
Debit card transaction values 53
Credit cards 54
Credit cards in issue 55
Credit cards in issue by branding 56
Value of credit card transactions 57
Charge cards 58
Charge cards in issue 58
Charge card value of transactions 59
Card issuer market shares 60
Debit cards 60
Debit cards in issue by issuer 60
Credit cards 61
Cards in issue by issuer 61
Credit card balances outstanding by issuer 62
Competitor developments 63
Consolidation 63
The Australian government's renewal of policy-a protectionist measure? 63
Australian banks Westpac and St.George merge 64
CBA acquires BankWest 64
Citigroup buys Australian card portfolio from Suncorp 65
Westpac and Virgin Money agree on extending credit card deal 65
Adelaide Bank and Bendigo Bank complete merger 65
New entrants 66
Woolworths and HSBC team up for credit card launch 66
Product analysis 66
Credit card design 66
Loyalty programs 68
Low fee and low rate cards 70
Product innovation 70
Credit cards 70
A range of partnership models are used by issuers in Australia 70
MasterCard and GE money to launch first green credit card 71
David Jones to issue American Express co-brand credit card 71
Cashless reconciliation engines in Australia 72
Westpac launches first Business Debit MasterCard card, designed to replace the cheque book 72
Prepaid cards 72
ANZ to launch prepaid Visa payWave card 72
Forecasting the Payment Card Market in Australia 73
Summary 73
Forecasting the debit card market 73
Forecasting the credit card market 77
Forecasting the charge card market 81
Appendix 86
Supplementary data 86
Market context 86
Definitions 89
ATM-only card 89
Co-branded card 89
Charge card 89
Credit card 90
Debit card 90
EFTPOS 90
EMV 90
POS terminal 90
Prepaid card 90
Methodology 90
Further reading 90
Ask the analyst 91
Datamonitor consulting 91
Disclaimer 91
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Table 1: GDP per capita in selected Asia Pacific markets, 2007 11
Table 2: Inflation rates in selected Asian and Asia Pacific markets, 2003-07 14
Table 3: Gini co-efficient in selected countries, 2007 15
Table 4: Australian fraud data for debit and credit/charge market, 2007 31
Table 5: Debit card fraud in Australia, 2007 32
Table 6: Credit and charge card fraud in Australia and Overseas on Australian-issued cards, 2007 33
Table 7: Timeline of the RBA investigation into credit card interchange, 1999-2007 37
Table 8: The interchange fee for the four party schemes in October 2000 and September 2006 43
Table 9: Credit cards from Australian issuers with introductory and standard APR and cash advance rates, 2008 67
Table 10: Selected reward based credit cards from Australian issuers, 2008 69
Table 11: Datamonitor's forecast for the debit card market 77
Table 12: Datamonitor's forecast for the credit card market 81
Table 13: Datamonitor's forecast for the charge card market 85
Table 14: Population data for selected Asia Pacific countries, 2007 86
Table 15: Current GDP for selected Asia Pacific countries, 2007 87
Table 16: Australia GDP, sector wise break-up, 2007 87
Table 17: GDP growth rates in Australia, 2003-07 87
Table 18: ATM data for Australia, 2003-07 88
Table 19: EFTPOS terminal data for Australia, 2003-07 88
Table 20: Payment fraud categories 89
Figure 1: Overview of Australia, 2007-08 8
Figure 2: Population size in selected Asia Pacific countries, 2007 9
Figure 3: GDP for selected countries across Asia Pacific, 2007 10
Figure 4: Australia's GDP is largely drawn from the services sector, 2007 12
Figure 5: Australia's GDP has been stable over the last four years, 2003-07 13
Figure 6: Debit cards dominate the Australian payment card market in terms of cards in issue, 2003-07 16
Figure 7: The majority of payment card transactions take place on debit cards, 2003-07 17
Figure 8: Debit cards overtook credit cards as the most frequently used card type in 2005 18
Figure 9: Pay now card market, number of transactions by scheme 19
Figure 10: Frequency of ATM and purchase transactions, 2003-07 20
Figure 11: Payment card spend grew strongly between 2003 and 2007 21
Figure 12: Average transaction values are highest on charge cards, 2003-07 22
Figure 13: Comparison of ATM and purchase transactions, 2003-07 23
Figure 14: Average value of ATM and purchase transactions, 2003-07 24
Figure 15: Turnover of ATM and purchase transaction per card, 2003-07 25
Figure 16: Turnover per card, 2003-07 26
Figure 17: Balances outstanding on credit cards have grown strongly over the last four years, 2003-07 27
Figure 18: Balances outstanding per account, 2003-07 28
Figure 19: The number of consumers per ATM in Australia declined to 784 in 2007 29
Figure 20: EFTPOS terminal penetration reached 33 people per terminal in 2007 30
Figure 21: Total card numbers by issuer, 2003-07 51
Figure 22: Total value of cards by issuer, 2003-07 52
Figure 23: Pay now cards, by scheme 53
Figure 24: EFTPOS also dominates the debit card market in terms of transaction values, 2003-07 54
Figure 25: Visa and MasterCard dominate the Australian credit card market in terms of cards in issue, 2003-07 56
Figure 26: Credit cards by segment, 2005-07 57
Figure 27: Visa is the leading card scheme in terms of credit card spend, 2003-07 58
Figure 28: American Express dominates the consumer charge card market in terms of cards in issue, 2003-07 59
Figure 29: American Express also dominates the consumer charge card market in terms of spend, 2003-07 60
Figure 30: CBA is the leading issuer in the debit card market, 2007 61
Figure 31: CBA is the leading card issuer in terms of credit cards, 2007 62
Figure 32: Westpac leads the credit card market in terms of balances outstanding, 2007 63
Figure 33: Characteristics of different payment card partnership models 71
Figure 34: Datamonitor's forecast for the number of debit cards, 2007-12f 74
Figure 35: Datamonitor's forecast for the number of transactions using debit cards, 2007-12f 75
Figure 36: Datamonitor's forecast for the value of transactions using debit cards, 2007-12f 76
Figure 37: Datamonitor's forecast for the number of credit cards, 2007-12f 78
Figure 38: Datamonitor's forecast for the number of transactions using credit cards, 2007-12f 79
Figure 39: Datamonitor's forecast for the value of transactions using credit cards, 2007-12f 80
Figure 40: Datamonitor's forecast for the number of charge cards, 2007-12f 82
Figure 41: Datamonitor's forecast for the number of transactions using charge cards, 2007-12f 83
Figure 42: Datamonitor's forecast for the value of transactions using charge cards, 2007-12f 84
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