A gradual recovery is expected over the next few years in the New Zealand payment card market, forecasts GlobalData, a global data and analytics company.

Rallying from a COVID-19 pandemic-triggered decline, the market should register a compound annual growth rate (CAGR) of 5% between 2022 and 2026 and reach NZ$98 billion ($67.1 billion) in 2026.

Issued by financial institutions, such as banks, payment cards allow the cardholder to access funds in a customer’s designated bank account or through a credit account, making payments by electronic transfer.

According to GlobalData’s Payment Cards Analytics, a database detailing payment card market size and market share data for 73 geographies, the value of card payments registered a decline of 11.8% in 2020 due to the COVID-19 pandemic. As businesses reopened, te card payments market registered a slow growth of 1.1% in 2021 to reach NZ$79.7 billion ($54.6 billion).

“The payment card market in New Zealand is mature, with each individual holding over three cards with high frequency of card payments at 91.4 in 2021,” comments Ravi Sharma, GlobalData lead banking and payments analyst.

Persistent efforts from the country’s financial authorities and banks to increase the awareness of electronic payments and develop payment acceptance infrastructure have boosted consumer use of card payment methods for day-to-day transactions.

“Besides cards, the rising preference for contactless payments have further resulted in the increased preference for cashless methods of payment. Although the COVID-19 pandemic affected the consumer spending, it also highlighted the importance of non-cash payment methods, thus further driving the use of electronic payments in the country,” says Shama.

Consumer payment habits have changed significantly post pandemic as large number of consumers are moving away from cash payments, opting instead for digital payment. The value of ATM cash withdrawals has dropped by 20.9% and 5.9% in 2020 and 2021, respectively, a trend that is expected to continue in 2022, according to GlobalData.

Payments NZ, a governance organization that manages the nation’s payment and clearing systems, confirms contactless payments are increasingly popular among consumers: contactless card transactions rose 62% between 2018 and 2020. The share of contactless payments in total card payments increased from 24% in 2018 to 39% in 2020.

“The gradual rise in consumer spending along with the rising preference for digital payments will help the country’s card market growth,” Sharma concludes. “However, growth could be slower in the near future due to the heightened global economic uncertainty and higher.”