The heyday of debit payments (and, also, buy now, pay later) may have finally passed, with indicators that credit cards are on the resurgence – at least as a means of payment, if not so much as a line of credit.
“The migration of card spend from credit and charge to debit has ceased”, industry analyst Mike Ebstein from MWE Consulting wrote in the executive summary for his monthly Australian Payment Cards Report on Friday.
The Reserve Bank’s monthly retail payments data shows that credit and charge card spend increased by around A$4 billion over the month of August.
“This was the highest monthly credit card spend on record,” Ebstein noted.
MWE wrote that the record spend was 36 per cent above the lockdown impacted August 2021 spend level, but 22 per cent above the pre-lockdown card spend figure for August 2019.
“Balances increased by $277 million from July to $38.3 billion but balances accruing interest dipped by $16 million to $17.8 billion,” he said.
Combined with an annualised revolve rate that reduced further to 48.5 per cent, banks may be profiting only at the margins from the uptick in balances.
American Express, however, fared well in August.
The combined market share of Amex and Diners Club the RBA put at 21.4 per cent. This is a rise of 90 basis points in one month and a 380 bps turnaround in one year.
In one indicator that the BNPL fad is fading, “the long slide in account numbers may well have reached its nadir with a further small increase from July to August,” Ebstein said.
On APRA’s data, the hefty slide in banks’ credit card balances over the last decade is more plateauing, rather than recovering.
Banks shed more than a third of their credit card receivables since peaking in mid 2017.
Over the pandemic, Commonwealth Bank has consolidated its lead, with a market share of 26.4 per cent at August 2022, a rise of 120 bps over two years.
NAB has doubled its credit card market share to 22.0 per cent, thanks to its recent takeover of Citi. The four major banks command 81 per cent of the credit card market (on APRA data).
Interestingly, Macquarie Bank, which is surging ahead in mortgage market and deposit market share, is taking a measured approach to bundling credit cards, or at least its customers are disciplined. The bank’s market share is static at 1.3 per cent.
HSBC, once a disruptor in this niche, has seen its market share ease to 1.6 per cent.