New Zealanders are using cards to shop more than cash – and ATM withdrawals are on the decline.
According to data and analytics company GlobalData, a post-lockdown rise in spending is expected to spark sustained growth in card payments for the next five years. The company forecasts the value of card payments will grow only a marginal 0.2 per cent this year, but it is expected to reach NZ$97.9 billion by 2024, increasing at a compound annual growth rate (CAGR) of 2.2 per cent between now and 2024.
ATM cash withdrawals, however, are predicted to decline at a CAGR of 3.6 per cent to reach $11.7 billion by 2024.
Ravi Sharma, lead banking and payments analyst at GlobalData, says the current pandemic has triggered a fear of infection through the handling of cash, pushing consumers to move away from cash payments.
“This will accelerate the shift towards electronic modes of payments, partially contactless cards.”
Payments NZ, the governing body of New Zealand’s payments system, temporarily increased the limit on contactless payment from $80 to $200 effective April 9, in order to push the use of contactless cards for in-store purchases. This is in line with similar measures undertaken by countries such as the UK and Australia.
Sharma says the current crisis is also driving e-commerce growth, as individuals are looking to avoid the exposure to the deadly virus, and preferring the comfort, safety and convenience of online shopping. This will also benefit cards payments as they account for two-third of the country’s e-commerce payments.
“New Zealand has a mature payment card market with well-developed payment infrastructure. Covid-19 will act as a catalyst to accelerate the shift towards cash-less payments in the country and support growth in card payments,” he says.