Australia’s long-suffering charge card market has staged a big recovery in volumes this year following a surge in usage by longstanding consumer and corporate cardholders.
The latest Reserve Bank payments data show that the value of transactions conducted through charge card providers – American Express and Diners Club – hit its highest level in October for more than four years.
Annual spending on charge cards is now running at A$56.9 billion, which is 24 per cent up on the $45.8 billion annualised spend recorded in October 2020.
The official data show that charge cards have been taking market share from Visa and Mastercard in the last 12 months and now account for 18.2 per cent of all purchases on both types of cards.
At the end of October last year, AMEX and Diners accounted for 15.2 per cent of the combined credit and charge card market.
The two charge card schemes have not recorded a market share rating above 18.2 per cent since June 2017.
Most of the growth for AMEX and Diners has come through established cardholders increasing their spending activity, although the total number of charge cards on issue in Australia also rose by around 16,000 to 1.38 million in the year to the end of October.
The narrative is a tad different for Visa and Mastercard, which were servicing 750,000 fewer credit cards at the end of October compared to the same time last year.
The credit card schemes now have 16.2 million Australian credit cards on issue compared to 17 million a year ago.
Buy now pay later volumes in Australia remain a minor segment of the national payments market despite the marketing noise surrounding the sector.
According to RBA research, the BNPL sector accounted for less than $10 billion worth of purchases in 2020, which equated to less than 2 per cent of the aggregate retail payments market.
Listed BNPL stocks have been de-rated this year as investors have grown increasingly sceptical that transaction growth will translate into profitability.
A raft of BNPL providers, including Openpay and Zip Co are now trading at less than a third of their recent peak valuations.
The steady decline of share prices across the BNPL sector has been unrelenting for most of this year, although Zip scrip staged a rally on Tuesday after the company revealed that its transaction volumes hit a monthly record in November.
Zip recorded transactions worth $906.5 million from its global operations last month, up 52 per cent on the same period last year.
However, growth in Australia appears to be slowing. The company reported a 42 per cent rise in Australian transaction volumes in November, which is less than the 60 per cent growth rate reported for the same month in 2020.
Zip’s share price rallied strongly after the business update was filed to the ASX and closed up 10 per cent to $4.77.
The company’s share price peaked at $14.53 in the middle of February.