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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: Debit Card Trends in the Asia-Pacific Region
Debit Card Use Dominates in China:
- Debit is the predominant card type in China. With 7.4 billion cards in circulation, they make up 90% of the card market.
- Debit transactions predominantly take place in a mobile app or via QR code, circumventing costly POS equipment.
- Mastercard services China’s card network, and though the multi-trillion dollar market sounds enticing, margins are thin.
- Competing against entrenched local options, it is difficult to imagine card networks becoming a force in China.
- AliPay and WeChat Pay, which do not rely on interchange for revenue, can rely on their e-commerce, gaming, and financial services beyond payments for revenue.
- China’s economy is predicted to suffer as a result of COVID-19, and debit transactions are predicted to take some years to reach pre-pandemic levels.
Mercator Advisory Group released a new report titled Debit Card Trends in the Asia-Pacific Region and finds that debit card use in the region is far from monolithic. Countries such as Australia and Japan have some similarities to the North American debit market, with a high degree of financial inclusion and a long history of card use. In contrast, countries such as China, India and Indonesia have relied primarily on cash until very recently.
”We find some interesting trends in debit card adoption in each country. Those nations that have been primarily cash based societies are moving towards mobile based solutions supported by QR codes at the point of sale at an incredible pace. This approach also supports another trend; the preference for local networks with technology and data that never leave the country,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.