Australian Credit Card Customers 2009

Published by: Datamonitor

Published: Oct. 2, 2009 - 35 Pages

Table of Contents

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

Abstract

• 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.

• 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.

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