Card payments in Singapore, which have seen sustained growth in the last few years, fell in 2020 amid the COVID-19 pandemic. They are set to rebound in 2021 with a 10.2 percent growth due to improving economic conditions and the reducing impact of the pandemic, forecasts GlobalData.
According to the data and analytics company, card payments are set to revive with the reopening of businesses, recovery in consumer spending, and the ongoing COVID-19 vaccination program. Against this backdrop, the value of card payments is forecast to register a compound annual growth rate of 8.2 percent between 2020 and 2024 to reach S$129.8 billion (US$96.5billion) in 2024.
Credit and charge cards were the most preferred card payments method in Singapore, accounting for 64.1 percent of the total card payments in 2020 while debit cards accounted for the remaining 35.9 percent share. The increase in consumer demand for credit, especially from the growing middle-class, helped the growth of credit and charge card transactions during the review period.
“Singapore payment cards market is well developed with the majority of the consumers having access to payment cards,” said Nikhil Reddy, banking and payments analyst at GlobalData. “However, the ability to earn cash back and other rewards associated with credit cards make them the preferred card payment.”
However, the economic slowdown and the travel restrictions amid the pandemic forced individuals to spend prudently, which resulted in the reduced usage of payment cards in the short term. The value of credit and charge card payments registered a decline of 9.4 percent in 2020. Debit cards registered a 3.8 percent decline.
With the revival of the economy, credit card usage is expected to increase with the value of credit and charge card payments forecast to register a compound annual growth rate of 8.7 percent between 2021 and 2024 while debit cards will grow at 5.3 percent for the same period.
The Singapore government, in collaboration with commercial banks, is also taking various measures to support the credit card market. To help those facing difficulties making card repayments in full, an initiative was introduced allowing consumers to convert their outstanding card balances to term loans at a lower interest rate.
“Singapore has a developed payment infrastructure and high consumer preference for electronic payments. While the COVID-19 pandemic and the uncertainty associated with it impacted card payments, the resumption of business activities along with the recovery in consumer spending will bring it back to the growth trajectory over the forecast period.” Reddy concluded.