FIRST CARD PAYMENTS GAIN TRACTION IN CASH-HEAVY JAPAN JAPAN
Chinese banks risk losing $61b revenue in payments by 2025 CHINA
A payment terminal in Japan
C
ash might still be king in Japan, but its share of cash payments is expected to drop from 76.2% in 2018 to 71.4% in 2022 as the country makes progress on its cashless ambitions, according to GlobalData. Total card payments value is poised to hit $752.6b (¥82.6t) from only $428.1b (¥47.0t) in 2014 to $587.6b (¥64.5t) in 2018. “Expanding payment infrastructure, rising card acceptance among SMEs, and the government’s focus on non-cash transactions are expected to support the growth of the payment cards market,” said GlobalData Payments Analayst Nikhil Reddy. Japan aims to achieve a cashless payment ratio of at least 40% by 2025. To achieve this, the government has embarked on a series of initiatives, including standardising QR code payments and introducing cashless payments at self-service kiosks. The government also devised a nine-month digital rebate program as a way to both offset the increased consumption tax and encourage more cashless transactions. The rebate rates are 5% at mom and pop stores and 2% at major chains. Further, restaurants, souvenir shops and popular tourist spots are gradually embracing point-of-sale (POS) terminals. For example, retail chain Aeon also announced plans to install 100,000 contactless POS terminals by 2020. Many ATMs are also being installed at locations with high footfalls, such as tourist attractions and supermarkets. 8 ASIAN BANKING AND FINANCE | MARCH 2020
A
s much as 13% of banks’ payments revenue in China, or $61b, is likely to be displaced by the growth of digital payments and competition from non-banks, reported professional services firm Accenture. Over the next six years, fee payments put 5.2% of banks’ payments revenue at risk in mainland China and 23.9% in Hong Kong, according to the report. Competition from non-banks in invisible payments, where payments are completed in a ‘virtual wallet’ on a mobile app or device, also puts 4% and 2.6% of revenues at risk in the mainland and in Hong Kong, respectively. Furthermore, card displacement by instant payments, where funds are transferred in real time and from which banks make little to no interest, will put an additional 3.6% and 2% of payment revenues at risk in China and Hong Kong, respectively. These are expected to further weigh in on banks from mainland China and Hong Kong, which are already dealing with global revenue pressures from declining card transactions. Between 2015 and 2018, revenue from business
People’s Bank of China
customer credit card transactions dropped 33% globally, revenue from consumer debit card transactions dropped nearly 15%, and revenue from credit cards dropped almost 12%, the report stated. “The digital transformation underway in payments will have a deep impact on all industry players and banks will have to fundamentally change how they think about their revenue in this area,” said The billions Albert Chan, financial services practice of dollars lead for Accenture in Greater China. banks “The billions of dollars banks previously previously earned from some of these channels earned will dry up, so they’ll need to develop from some new digital business models to compete of these in this new era. Banks lagging behind channels will risk being relegated to the plumbing of dry up, so payments.” they’ll need In contrast, payments revenue of to develop non-bank financial services in Mainland new digital China are projected to skyrocket to business $494b in 2025 at an annual rate of models to 9.1%, from only about $292b in 2019. compete in Meanwhile, revenue in Hong Kong is set this new era. to rise 2.1% to $10.7b from $9.5b.
Which credit card got the most love from Singaporeans? SINGAPORE
Amongst the card issuers that Singaporeans are subscribed to, American Express (AMEX) recorded the highest satisfaction rate with an overall score of 755, followed by DBS Bank with a score of 737 and PSOB at third with 721, a report by J.D. Power Singapore found. Overall satisfaction rates amongst credit card providers have steadily dropped, with the average score dipping by 6 points to 712 in 2019. Lofty transaction fees and forex rates incurred for overseas transactions drove the dislike. Fears relating to the possibility of fraud also emerged to undermine credit card payments. Cash still accounts for 50% of Singaporeans’ total spending abroad. On average, Singaporeans shell out an estimated $3,542.3 (S$4,800) every year for their overseas travel activities.
Credit Card Customer Satisfaction, 2019
Source: J.D. Power
