Overview 1
Catalyst 1
Summary 1
Summary 2
Key trends in the Australian payment card industry 2
Payment card use has increased over the last five years 2
Debit cards have become increasingly popular for small value transactions 2
Profiling the Australian credit card consumer 2
Most Australian consumers have a relationship with a credit card provider 2
Credit card spending has remained firm despite the economic downturn 3
Card-based payment methods are popular for a range of transactions 3
Most cardholders are satisfied with their credit limit and pay off their entire monthly balance 3
Drivers of customer take over and retention are changing 3
Credit card customers can be grouped in three basic sectors 4
Competitor focus 4
CBA is the industry leader when it comes to household credit card outstanding balances 4
Ascendant players have gained industry share over the last five years 4
Visa and MasterCard face increasing competition from American Express 5
Product focus 5
Cards can be broadly categorized by fees and rates 5
Rewards are largely determined by annual fees 6
The major issuers focus on different product types 6
Card profitability is cresting 7
Credit card fees are an important revenue stream 7
Future focus 7
In the long term, increased debt aversion will lead to decreasing overall leverage 7
As the economy picks up competition will increase 7
Technological developments will create new battlegrounds 8
Positive credit reporting may make credit card applications easier to evaluate 8
It will become harder to charge fees 8
The discussion regarding interchange fee regulation continues 8
Data table of Contents 9
Data table of figures 10
Data table of tables 11
Key Drivers and Main Trends in the Australian Payment Card Industry 12
Payment card use has increased over the last five years 12
There are almost 15 million credit and charge card accounts in Australia 12
Average transaction value per account and average spend per transaction has increased slightly 13
Increasing number of cards and transactions have driven the increase in card usage 14
Repayments have increased over the last several years 15
Outstanding balances have recently leveled off 17
Credit limits have increased but show slowing growth 19
Debit cards have become increasingly popular for small value transactions 20
Debit card transaction value has grown strongly over the last several years 20
The average value per debit account has soared but not the average value per transaction 21
Scheme debit cards have recently become common 23
Debit card usage has outstripped the growth in credit card usage 25
Profiling the Australian Credit Card Consumer 28
Most Australian consumers have a relationship with a credit card provider 28
Almost three-quarters of consumers have a credit card 28
Consumers generally stay with their main card provider for more than five years 29
Bankwest and St.George have the highest proportion of relatively new cardholders 30
Debit cards are a popular alternative for those without credit cards 31
Brand industry share of main cardholders has shifted 33
The major banks have captured a larger share of main credit cardholders 34
Credit card spending has remained firm despite the economic downturn 35
The median cardholder spends between A$500 and A$999 a month on their main credit card 35
Card-based payment methods are popular for a range of transactions 37
Secondary cards are commonly used to separate different kinds of expenses 38
Most cardholders clear their balances in full and are fine with their credit limit 39
The median credit limit on cardholder's main credit card is between A$5,000 and A$9,999 39
Most cardholders are fine with their credit limit 40
Around half of cardholders habitually transact rather than revolve 41
American Express cardholders are the most likely to be transactors 42
Out of the cardholders questioned, 40% never pay interest on their main credit card 43
Drivers of customer take over and retention are changing 44
Credit card customers can be grouped in three basic sectors 44
Most credit cards are arranged face-to-face 47
Bankwest cardholders are especially likely to have used the industry player website for information 50
Reward schemes are no longer a key driver of customer take over 51
CBA cardholders are especially likely to have been cross-sold their card 53
Pricing has become the most important factor for customer take over 54
Current cardholders are most likely to switch card provider to avoid the card fee 56
Cardholders have become less satisfied with their main credit card provider 58
Bankwest has the highest proportion of very satisfied cardholders 59
Competitor Focus 62
Five institutions hold the majority of outstanding credit card balances 62
CBA is the industry leader when it comes to household credit card outstanding balances 62
Ascendant players have gained industry share over the last five years 63
Citibank has built a unique position challenging the majors 66
Visa and MasterCard face increasing competition from American Express 67
Visa and MasterCard currently have a dominant industry position 67
The major banks are issuing American Express companion cards 68
Product Focus 71
Fees, rates and features define credit cards 71
Cards fall into a narrow band categorized by fees and rates 71
The higher the annual fee, the greater the reward earn rate 72
Balance transfer options are a common tool for customer take over 73
The major issuers focus on different product types 74
The seven major card issuers cover most target sectors 74
Most major card issuers have products with lower fees and rates 75
The mid-price sector includes the bulk of major issuers' cards 76
Most issuers have cards targeting the premium sector 77
Card profitability is cresting 78
Margins on credit card products have increased 78
Credit card fees are an important revenue stream 79
Future Focus 81
Conditions in the card industry are set to become more difficult 81
In the long term, increased debt aversion will lead to decreasing overall leverage 81
As the economy picks up, competition will increase 82
Price conscious 82
Mainstream 82
Premium 83
Technological developments will create new battlegrounds 83
New card types will increase competitive pressures 83
Positive credit reporting may make credit card applications easier to evaluate 84
It will be challenging to maintain card profitability in the future 84
It will become harder to charge fees because of the rise of fee-free banking 84
Australian consumers have become savvier at transacting 85
The discussion regarding interchange fee regulation continues 85
APPENDIX 87
Data tables 87
Key trends in the Australian payment card industry 87
Profiling the Australian credit card consumer 96
Competitor focus 109
Product focus 115
Further reading 117
Ask the analyst 117
Datamonitor consulting 117
Disclaimer 118
List of Tables
Data table 1: Payment card metrics over time, May 2005-May 2009 2
Data table 2: Outstanding balances on the books of banks (A$bn), June 2004-June 2009 5
Data table 3: In the 12 months ending May 2009 credit and charge card transactions totaled A$220 billion, May 2004-May2009 15
Data table 4: The number of debit card transaction has increased sharply, May 2004-May 2009 23
Data table 5: Payment card metrics over time, May 2005-May 2009 26
Data table 6: Payment card metrics over time, May 2005-May 2009 26
Data table 7: Characteristics of different cardholder target sectors 45
Data table 8: Outstanding balances on the books of banks (A$bn), June 2004-June 2009 64
Data table 9: Metrics for credit and charge card accounts, May 2004-May 2009 87
Data table 10: Metrics for credit and charge card accounts, May 2004-May 2009 88
Data table 11: Metrics for credit and charge card accounts, May 2004-May 2009 89
Data table 12: Metrics for credit and charge card accounts, May 2004-May 2009 90
Data table 13: Metrics for credit and charge card accounts, May 2004-May 2009 91
Data table 14: Metrics for credit and charge card accounts, May 2004-May 2009 92
Data table 15: Metrics for debit card accounts, May 2004-May 2009 93
Data table 16: Metrics for debit card accounts, May 2004-May 2009 94
Data table 17: Metrics for debit card accounts, March 2008-May 2009 95
Data table 18: Metrics for debit card accounts, March 2008-May 2009 96
Data table 19: Number of credit cards held, April 2009 96
Data table 20: Number of credit cards held by household income, April 2009 97
Data table 21: Industrieshare of main cardholders by issuer, 2008-09 97
Data table 22: Industrieshare of main cardholders by brand, 2008-09 97
Data table 23: Reasons for choosing main credit card provider, April 2009 98
Data table 24: Reasons for choosing main credit card provider, April 2009 98
Data table 25: Sources of information used when choosing main credit card provider, April 2009 99
Data table 26: Common sources of information used when choosing provider of main credit card, April 2009 99
Data table 27: Time held main credit card, 2008-09 100
Data table 28: Time held main credit card, April 2009 100
Data table 29: Monthly spending on main credit card, April 2009 101
Data table 30: Monthly spending on main credit card, 2008-09 101
Data table 31: Reasons for using non-main card, April 2009 101
Data table 32: How much of the balance cardholders usually pay each month on their main credit card, 2008-09 102
Data table 33: How much of the balance cardholders usually pay each month on their main credit card, April 2009 102
Data table 34: How often cardholders pay interest on their main credit card, 2008-09 103
Data table 35: Features of main credit card, April 2009 103
Data table 36: Reasons for dissatisfaction with main credit card provider, April 2009 103
Data table 37: Satisfaction with provider of main credit card, 2008-09 104
Data table 38: Satisfaction with provider of main credit card, April 2009 104
Data table 39: Methods of arranging main credit card, April 2009 105
Data table 40: Methods of arranging main credit card, 2008-09 105
Data table 41: Preferred payment method for different transactions, April 2009 105
Data table 42: Ranking of importance of product features when choosing new credit card, April 2009 106
Data table 43: Likelihood to switch credit card provider for better features, April 2009 106
Data table 44: Attitude statements regarding credit cards, April 2009 107
Data table 45: Reasons for switching main credit card, April 2009 107
Data table 46: Credit limit of main credit card, 2008-09 108
Data table 47: View of credit limit of main credit card, April 2009 108
Data table 48: Reasons for not having credit card, April 2009 108
Data table 49: Brand industry share of value of credit and charge card transactions, May 2004-May 2009 109
Data table 50: Merchant service fees, March 2003-March 2009 110
Data table 51: Industrieshare of banks' outstanding household credit card balances, June 2004-March 2007 111
Data table 52: Industrieshare of banks' outstanding household credit card balances, April 2007-June 2009 112
Data table 53: Outstanding household credit card balances on bank books, June 2009 113
Data table 54: Bank industry shares of outstanding household credit card balances on bank books, June 2009 113
Data table 55: Indexed growth of bank outstanding household credit card balances, June 2004-June 2009 114
Data table 56: Average rates for standard cards, low rate cards and 90-day bank bills, July 2004-July 2009 115
Data table 57: Average margins for standard and low rate cards over 90-day bank bills, July 2004-July 2009 116
Data table 58: Bank fees accrued from households (A$bn), 1998-2008 117
List of Figures
Chart 1: The myriad cards available in the industry fall into a band defined by interest rates and fees 6
Chart 2: The number of credit and charge card accounts has grown strongly, May 2004-May 2009 13
Chart 3: Average monthly transaction value on credit and charge cards has increased slightly, May 2004-May 2009 14
Chart 4: Monthly repayments on credit and charge cards have increased, May 2004-May 2009 16
Chart 5: Net repayments have recently increased, May 2004-May 2009 17
Chart 6: Outstanding balances on credit and charge card accounts have leveled off, May 2004-May 2009 18
Chart 7: The proportion of outstanding balances accruing interest has remained stable, May 2004-May 2009 19
Chart 8: Average credit limits have leveled off, May 2004-May 2009 20
Chart 9: Debit card transaction values have almost doubled in five years, May 2004-May 2009 21
Chart 10: Average monthly transaction value per debit card account has increased strongly, May 2004-May 2009 22
Chart 11: Scheme debit cards are relatively common in the industry, March 2008-May 2009 24
Chart 12: Scheme debit cards have a higher average purchase value, March 2008-May 2009 25
Chart 13: Higher age groups hold more credit cards, April 2009 28
Chart 14: Higher income groups hold more credit cards, April 2009 29
Chart 15: Most credit cardholders have held their main card for over five years, 2008-09 30
Chart 16: NAB main cardholders have the longest tenure and Bankwest the shortest, April 2009 31
Chart 17: No perceived need is the most common reason for not having a credit card, April 2009 32
Chart 18: The reasons for not having a credit card are complex and overlapping, April 2009 33
Chart 19: Around half of credit cardholders name a Visa card as their main credit card, 2008-09 34
Chart 20: The major banks have captured a larger share of main credit cardholders, 2008-09 35
Chart 21: The median monthly spending on main credit cards is A$500-A$999, April 2009 36
Chart 22: The proportion spending A$2,000 or more has increased, 2008-09 37
Chart 23: Card-based payment methods are commonly used, April 2009 38
Chart 24: Secondary cards are commonly used to separate different kinds of expenses, April 2009 39
Chart 25: Credit limits on cardholders' main credit cards have increased slightly, 2008-09 40
Chart 26: Most cardholders are fine with their credit limit, April 2009 41
Chart 27: Most cardholders generally pay off the entire monthly balance on their main credit card, from 2008 to 2009 42
Chart 28: American Express cardholders are more likely to be transactors, April 2009 43
Chart 29: A significant proportion of cardholders never pay interest on their main credit card, 2008-09 44
Chart 30: Banks can sector their product and customer targeting strategies into three groups 45
Chart 31: There are tradeoffs in targeting different customer groups 46
Chart 32: Credit cardholders are split in regard to rewards, April 2009 47
Chart 33: Most cardholders have arranged their main cards face-to-face, April 2009 48
Chart 34: Face-to-face is the most common method of arranging credit cards, 2008-09 49
Chart 35: Word-of-mouth is a powerful source of information when choosing card provider, April 2009 50
Chart 36: Bankwest cardholders are the most likely to have used the website for information, April 2009 51
Chart 37: Rewards schemes are a common feature of credit cards, April 2009 52
Chart 38: Banks have been very successful at cross-selling cards, April 2009 53
Chart 39: A large proportion of CBA cardholders were cross-sold their card, April 2009 54
Chart 40: Lower fees are the most appealing factor if choosing a new credit card, April 2009 55
Chart 41: Premium branding is the least appealing factor if choosing a new credit card, April 2009 56
Chart 42: Cardholders are most likely to switch card provider to avoid the card fee, April 2009 57
Chart 43: Switchers of main card provider commonly do so because of rates, April 2009 58
Chart 44: Cardholders have become less satisfied with their main credit card provider, 2008-09 59
Chart 45: Bankwest cardholders have the highest degree of satisfaction, April 2009 60
Chart 46: Uncompetitive interest rates are the most common reason for dissatisfaction, April 2009 61
Chart 47: CBA has the highest value of outstanding credit card balances from households, June 2009 62
Chart 48: Industrieshare of banks' outstanding balances for household credit cards, June 2009 63
Chart 49: Smaller banks have grown their industry share of bank outstanding balances, June 2004-June 2009 65
Chart 50: Large banks have not gained industry share of bank outstanding balances, June 2004-June 2009 66
Chart 51: Citibank has grown its outstanding balances rapidly, June 2004-June 2009 67
Chart 52: MasterCard and Visa dominate charge and credit card transaction value, May 2004-May 2009 68
Chart 53: Merchant service fees have been falling since 2003, March 2003-March 2009 69
Chart 54: The cards available in the industry fall into a narrow band defined by interest rates and fees 71
Chart 55: Reward generosity and card annual fee are correlated 72
Chart 56: There are a range of balance transfer options in the Australian credit card industry 73
Chart 57: The major card providers differ in their industry positioning 74
Chart 58: Most major card issuers have products with lower fees and rates 75
Chart 59: The mid-price sector has the highest number of offerings 76
Chart 60: Most card providers have at least one top end card offering 77
Chart 61: Average interest rates have dropped over the last year, July 2004-July 2009 78
Chart 62: Margins of credit card rates over 90-day bank bill rates has increased, July 2004-July 2009 79
Chart 63: Credit card fees have become an increasingly important component of bank fees, 1998-2008 80
Chart 64: Overall consumer leverage has recently decreased, March 2004-March 2009 81
