New Zealand's card payments market is expected to grow by 6.5 percent to reach NZ$102.4 billion ($65.0 billion) in 2023, supported by an economic rebound and a growing consumer preference for electronic payments, according to GlobalData, a leading data and analytics company.
According to GlobalData's Payment Cards Analytics, New Zealand saw a decline of 10.5 percent in card payments value in 2020 as it grappled with the COVID-19 pandemic and, subsequently, its economy fell into recession. However, with the economic rebound, New Zealand's card market recovered with 1.0 percent growth in 2021, followed by 6.6 percent growth in 2022.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData said the payment card market in New Zealand was mature, with individuals, on average, owning more than three cards. The frequency of card payments remained notably high at 92.7 in 2022.
"The accessibility to formal financial services is seamless, contributing to a populace that is exceedingly at ease with using credit and debit cards for both online and in-store transactions. Consistent endeavours by the financial regulators to enhance knowledge about electronic payments and foster the expansion of payment acceptance infrastructure have further bolstered the progression of card payments," said Sharma.
There has also been a significant change in consumer payment habits post-pandemic, as many consumers are moving away from cash payments and instead opting for digital payments. The value of ATM cash withdrawals was reduced by 20.9 percent and 5.9 percent in 2020 and 2021, respectively, a trend that continued in 2022 with a 3.4 percent decline.
Among the card types, credit and charge cards are favoured over debit cards, accounting for 53.7 percent of total card payments in 2023. This can be attributed to value-added benefits such as reward points and discounts on purchases at partner retailers. Debit cards account for the remaining 46.3 percent share. Local scheme provider EFTPOS dominates the debit card market in New Zealand. The strong adoption of EFTPOS is due to its easy accessibility and higher merchant acceptance.
To further drive card acceptance among merchants, New Zealand enacted new legislation in November 2022 to regulate interchange fees on card payments. Accordingly, the interchange fees for consumer credit card transactions were capped at 0.8 percent, previously charged up to 2.25 percent. Similarly, online and contactless debit card transactions were capped at 0.6 percent and 0.2 percent, respectively.
Sharma concluded that the economic recovery, rise in consumer spending, and increased contactless adoption coupled with government support will continue to push card payments usage in New Zealand, which is projected to register a compound annual growth rate (CAGR) of 4.1 percent between 2023 to 2027 to reach NZ$ 120.2 billion ($76.4 bn) in 2027."
