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Australian Credit Card Customers 2009

Datamonitor
October 2, 2009
35 Pages - SKU: DFMN2470039

Abstract Table of Contents Search inside this report Related Reports

Countries covered: Australia

Introduction

Australian credit card customers 2009 is an invaluable insight into the behaviour and preferences of Australian credit card holders. The report focuses on key issues including card spending, reasons for card choice and preferred providers and sales channels.

Scope

Based on Datamonitor's Australian Financial Services Survey of 2,300 adult consumers conducted in April 2009.
Survey findings related to specific providers.
Includes a detailed discussion of historical developments i n the Australian credit card market.
Includes analysis of upcoming trends and developments.

Highlights

Use of payment cards has increased strongly over the last five years, with debit cards used for lower transaction values and credit cards dominating larger transactions.

American Express, Citibank and Bankwest cardholders are especially likely to have used the company website as a source of information when choosing main card provider.

When consumers were asked to rank seven common product features in terms of the importance they would carry when choosing a new card, lower fees were overwhelmingly the most important factor.

Reasons to Purchase

Confirm what consumers look for when choosing a credit card.
Quantify the benefit of card features such as reward schemes and lower fee offers.
Better understand consumers' channel preferences when arranging a credit card.

Overview: Catalyst; Summary; Executive Summary; Key trends in the Australian payment card market; Payment card use has increased over the last five years; Debit cards have become increasingly popular for small value transactions; Profiling the Australian credit card consumer; Most Australian consumers have a relationship with a credit card provider; Credit card spending has remained firm despite the economic downturn; Card-based payment methods are popular for a range of transactions; Most cardholders are satisfied with their credit limit and pay off their entire monthly balance; Drivers of customer acquisition and retention are changing; Credit card customers can be grouped in three basic segments; Competitor focus; CBA is the market leader when it comes to household credit card outstanding balances; Ascendant players have gained market share over the last five years; Visa and MasterCard face increasing competition from American Express; Product focus; Cards can be broadly categorized by fees and rates; Rewards are largely determined by annual fees; The major issuers focus on different product types; Card profitability is cresting; Credit card fees are an important revenue stream; Future focus; In the long term, increased debt aversion will lead to decreasing overall leverage; As the economy picks up competition will increase; Technological developments will create new battlegrounds; Positive credit reporting may make credit card applications easier to evaluate; It will become harder to charge fees; The discussion regarding interchange fee regulation continues; Table of Contents; Table of figures; Table of tables; Key Trends in the Australian Payment Card Market; Payment card use has increased over the last five years; There are almost 15 million credit and charge card accounts in Australia; Average transaction value per account and average spend per transaction has increased slightly; Increasing number of cards and transactions have driven the increase in card usage; Repayments have increased over the last several years; Outstanding balances have recently leveled off; Credit limits have increased but show slowing growth; Debit cards have become increasingly popular for small value transactions; Debit card transaction value has grown strongly over the last several years; The average value per debit account has soared but not the average value per transaction; Scheme debit cards have recently become common; Debit card usage has outstripped the growth in credit card usage; Profiling the Australian Credit Card Consumer; Most Australian consumers have a relationship with a credit card provider; Almost three-quarters of consumers have a credit card; Consumers generally stay with their main card provider for more than five years; Bankwest and St.George have the highest proportion of relatively new cardholders; Debit cards are a popular alternative for those without credit cards; Brand market share of main cardholders has shifted; The major banks have captured a larger share of main credit cardholders; Credit card spending has remained firm despite the economic downturn; The median cardholder spends between A$500 and A$999 a month on their main credit card; Card-based payment methods are popular for a range of transactions; Secondary cards are commonly used to separate different kinds of expenses; Most cardholders clear their balances in full and are fine with their credit limit; The median credit limit on cardholder's main credit card is between A$5,000 and A$9,999; Most cardholders are fine with their credit limit; Around half of cardholders habitually transact rather than revolve; American Express cardholders are the most likely to be transactors; Out of the cardholders questioned, 40% never pay interest on their main credit card; Drivers of customer acquisition and retention are changing; Credit card customers can be grouped in three basic segments; Most credit cards are arranged face-to-face; Bankwest cardholders are especially likely to have used the company website for information; Reward schemes are no longer a key driver of customer acquisition; CBA cardholders are especially likely to have been cross-sold their card; Pricing has become the most important factor for customer acquisition; Current cardholders are most likely to switch card provider to avoid the card fee; Cardholders have become less satisfied with their main credit card provider; Bankwest has the highest proportion of very satisfied cardholders; Competitor Focus; Five institutions hold the majority of outstanding credit card balances; CBA is the market leader when it comes to household credit card outstanding balances; Ascendant players have gained market share over the last five years; Citibank has built a unique position challenging the majors; Visa and MasterCard face increasing competition from American Express; Visa and MasterCard currently have a dominant market position; The major banks are issuing American Express companion cards; Product Focus; Fees, rates and features define credit cards; Cards fall into a narrow band categorized by fees and rates; The higher the annual fee, the greater the reward earn rate; Balance transfer options are a common tool for customer acquisition; The major issuers focus on different product types; The seven major card issuers cover most target segments; Most major card issuers have products with lower fees and rates; The mid-price segment includes the bulk of major issuers' cards; Most issuers have cards targeting the premium segment; Card profitability is cresting; Margins on credit card products have increased; Credit card fees are an important revenue stream; Future Focus; Conditions in the card market are set to become more difficult; In the long term, increased debt aversion will lead to decreasing overall leverage; As the economy picks up, competition will increase; Price conscious; Mainstream; Premium; Technological developments will create new battlegrounds; New card types will increase competitive pressures; Positive credit reporting may make credit card applications easier to evaluate; It will be challenging to maintain card profitability in the future; It will become harder to charge fees because of the rise of fee-free banking; Australian consumers have become savvier at transacting; The discussion regarding interchange fee regulation continues
APPENDIX: Data tables; Key trends in the Australian payment card market; Profiling the Australian credit card consumer; Competitor focus; Product focus; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: Payment card metrics over time, May 2005-May 2009; Table 2: Outstanding balances on the books of banks (A$bn), June 2004-June 2009; Table 3: In the 12 months ending May 2009 credit and charge card transactions totaled A$220 billion, May 2004-May2009; Table 4: The number of debit card transaction has increased sharply, May 2004-May 2009; Table 5: Payment card metrics over time, May 2005-May 2009; Table 6: Payment card metrics over time, May 2005-May 2009; Table 7: Characteristics of different cardholder target segments; Table 8: Outstanding balances on the books of banks (A$bn), June 2004-June 2009; Table 9: Metrics for credit and charge card accounts, May 2004-May 2009; Table 10: Metrics for credit and charge card accounts, May 2004-May 2009; Table 11: Metrics for credit and charge card accounts, May 2004-May 2009; Table 12: Metrics for credit and charge card accounts, May 2004-May 2009; Table 13: Metrics for credit and charge card accounts, May 2004-May 2009; Table 14: Metrics for credit and charge card accounts, May 2004-May 2009; Table 15: Metrics for debit card accounts, May 2004-May 2009; Table 16: Metrics for debit card accounts, May 2004-May 2009; Table 17: Metrics for debit card accounts, March 2008-May 2009; Table 18: Metrics for debit card accounts, March 2008-May 2009; Table 19: Number of credit cards held, April 2009; Table 20: Number of credit cards held by household income, April 2009; Table 21: Market share of main cardholders by issuer, 2008-09; Table 22: Market share of main cardholders by brand, 2008-09; Table 23: Reasons for choosing main credit card provider, April 2009; Table 24: Reasons for choosing main credit card provider, April 2009; Table 25: Sources of information used when choosing main credit card provider, April 2009; Table 26: Common sources of information used when choosing provider of main credit card, April 2009; Table 27: Time held main credit card, 2008-09; Table 28: Time held main credit card, April 2009; Table 29: Monthly spending on main credit card, April 2009; Table 30: Monthly spending on main credit card, 2008-09; Table 31: Reasons for using non-main card, April 2009; Table 32: How much of the balance cardholders usually pay each month on their main credit card, 2008-09; Table 33: How much of the balance cardholders usually pay each month on their main credit card, April 2009; Table 34: How often cardholders pay interest on their main credit card, 2008-09; Table 35: Features of main credit card, April 2009; Table 36: Reasons for dissatisfaction with main credit card provider, April 2009; Table 37: Satisfaction with provider of main credit card, 2008-09; Table 38: Satisfaction with provider of main credit card, April 2009; Table 39: Methods of arranging main credit card, April 2009; Table 40: Methods of arranging main credit card, 2008-09; Table 41: Preferred payment method for different transactions, April 2009; Table 42: Ranking of importance of product features when choosing new credit card, April 2009; Table 43: Likelihood to switch credit card provider for better features, April 2009; Table 44: Attitude statements regarding credit cards, April 2009; Table 45: Reasons for switching main credit card, April 2009; Table 46: Credit limit of main credit card, 2008-09; Table 47: View of credit limit of main credit card, April 2009; Table 48: Reasons for not having credit card, April 2009; Table 49: Brand market share of value of credit and charge card transactions, May 2004-May 2009; Table 50: Merchant service fees, March 2003-March 2009; Table 51: Market share of banks' outstanding household credit card balances, June 2004-March 2007; Table 52: Market share of banks' outstanding household credit card balances, April 2007-June 2009; Table 53: Outstanding household credit card balances on bank books, June 2009; Table 54: Bank market shares of outstanding household credit card balances on bank books, June 2009; Table 55: Indexed growth of bank outstanding household credit card balances, June 2004-June 2009; Table 56: Average rates for standard cards, low rate cards and 90-day bank bills, July 2004-July 2009; Table 57: Average margins for standard and low rate cards over 90-day bank bills, July 2004-July 2009; Table 58: Bank fees accrued from households (A$bn), 1998-2008
List of Figures: Figure 1: The myriad cards available in the market fall into a band defined by interest rates and fees; Figure 2: The number of credit and charge card accounts has grown strongly, May 2004-May 2009; Figure 3: Average monthly transaction value on credit and charge cards has increased slightly, May 2004-May 2009; Figure 4: Monthly repayments on credit and charge cards have increased, May 2004-May 2009; Figure 5: Net repayments have recently increased, May 2004-May 2009; Figure 6: Outstanding balances on credit and charge card accounts have leveled off, May 2004-May 2009; Figure 7: The proportion of outstanding balances accruing interest has remained stable, May 2004-May 2009; Figure 8: Average credit limits have leveled off, May 2004-May 2009; Figure 9: Debit card transaction values have almost doubled in five years, May 2004-May 2009; Figure 10: Average monthly transaction value per debit card account has increased strongly, May 2004-May 2009; Figure 11: Scheme debit cards are relatively common in the market, March 2008-May 2009; Figure 12: Scheme debit cards have a higher average purchase value, March 2008-May 2009; Figure 13: Higher age groups hold more credit cards, April 2009; Figure 14: Higher income groups hold more credit cards, April 2009; Figure 15: Most credit cardholders have held their main card for over five years, 2008-09; Figure 16: NAB main cardholders have the longest tenure and Bankwest the shortest, April 2009; Figure 17: No perceived need is the most common reason for not having a credit card, April 2009; Figure 18: The reasons for not having a credit card are complex and overlapping, April 2009; Figure 19: Around half of credit cardholders name a Visa card as their main credit card, 2008-09; Figure 20: The major banks have captured a larger share of main credit cardholders, 2008-09; Figure 21: The median monthly spending on main credit cards is A$500-A$999, April 2009; Figure 22: The proportion spending A$2,000 or more has increased, 2008-09; Figure 23: Card-based payment methods are commonly used, April 2009; Figure 24: Secondary cards are commonly used to separate different kinds of expenses, April 2009; Figure 25: Credit limits on cardholders' main credit cards have increased slightly, 2008-09; Figure 26: Most cardholders are fine with their credit limit, April 2009; Figure 27: Most cardholders generally pay off the entire monthly balance on their main credit card, 2008-2009; Figure 28: American Express cardholders are more likely to be transactors, April 2009; Figure 29: A significant proportion of cardholders never pay interest on their main credit card, 2008-09; Figure 30: Banks can segment their product and customer targeting strategies into three groups; Figure 31: There are tradeoffs in targeting different customer groups; Figure 32: Credit cardholders are split in regard to rewards, April 2009; Figure 33: Most cardholders have arranged their main cards face-to-face, April 2009; Figure 34: Face-to-face is the most common method of arranging credit cards, 2008-09; Figure 35: Word-of-mouth is a powerful source of information when choosing card provider, April 2009; Figure 36: Bankwest cardholders are the most likely to have used the website for information, April 2009; Figure 37: Rewards schemes are a common feature of credit cards, April 2009; Figure 38: Banks have been very successful at cross-selling cards, April 2009; Figure 39: A large proportion of CBA cardholders were cross-sold their card, April 2009; Figure 40: Lower fees are the most appealing factor if choosing a new credit card, April 2009; Figure 41: Premium branding is the least appealing factor if choosing a new credit card, April 2009; Figure 42: Cardholders are most likely to switch card provider to avoid the card fee, April 2009; Figure 43: Switchers of main card provider commonly do so because of rates, April 2009; Figure 44: Cardholders have become less satisfied with their main credit card provider, 2008-09; Figure 45: Bankwest cardholders have the highest degree of satisfaction, April 2009; Figure 46: Uncompetitive interest rates are the most common reason for dissatisfaction, April 2009; Figure 47: CBA has the highest value of outstanding credit card balances from households, June 2009; Figure 48: Market share of banks' outstanding balances for household credit cards, June 2009; Figure 49: Smaller banks have grown their market share of bank outstanding balances, June 2004-June 2009; Figure 50: Large banks have not gained market share of bank outstanding balances, June 2004-June 2009; Figure 51: Citibank has grown its outstanding balances rapidly, June 2004-June 2009; Figure 52: MasterCard and Visa dominate charge and credit card transaction value, May 2004-May 2009; Figure 53: Merchant service fees have been falling since 2003, March 2003-March 2009; Figure 54: The cards available in the market fall into a narrow band defined by interest rates and fees; Figure 55: Reward generosity and card annual fee are correlated; Figure 56: There are a range of balance transfer options in the Australian credit card market; Figure 57: The major card providers differ in their market positioning; Figure 58: Most major card issuers have products with lower fees and rates; Figure 59: The mid-price segment has the highest number of offerings; Figure 60: Most card providers have at least one top end card offering; Figure 61: Average interest rates have dropped over the last year, July 2004-July 2009; Figure 62: Margins of credit card rates over 90-day bank bill rates has increased, July 2004-July 2009; Figure 63: Credit card fees have become an increasingly important component of bank fees, 1998-2008; Figure 64: Overall consumer leverage has recently decreased, March 2004-March 2009

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Australian Credit Card Customers 2009

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