Rising financial inclusion and improvements in the payments infrastructure drove growth.

Card payments in China grew by 7.1% in 2020 and is forecasted to grow by a robust compound annual growth rate (CAGR) of 11% between 2020 and 2023 to reach $23.9t (CNY166.2t), reports data and analytics firm GlobalData.

From 2015 to 2019, card payments in the country grew by a CAGR of 19.8%, rising from $7.9t (CNY55t) in 2015 to $16.3t (CNY113.3t) in 2019.

Growth was supported by the rising financial inclusion and improvement in payment infrastructure. Whilst the economy was impacted by COVID-19 pandemic, it is gradually returning to near normalcy, said Kartik Challa, payments senior analyst, GlobalData.

China introduced stringent lockdown measures quickly, which allowed the country to control the virus and limit transmission, the report noted. This, combined with the introduction of their $829.95b stimulus package or equivalent to 5.61% of GDP, has set the stage for a strong recovery.

The COVID-19 pandemic and the subsequent economic slowdown forced individuals to spend prudently, which is expected to slow down credit card usage in the short term, noted GlobalData. However, with the economy’s expected recovery, credit card usage is expected increase during the forecast period.

China is the largest debit card market globally, with an estimated 8.1 billion debit cards in circulation in 2020. Debit cards reportedly remain the most preferred card payment method, accounting for 57% of the total card payments by value in 2020.

Furthermore, the increase in consumer demand for credit especially from the growing middle-class, has pushed the expansion of credit and charge card transactions.

Notedly, in 2020, credit and charge cards’ share in the total card payments value increased to 43% from 39.4% five years earlier.

“China has a developed payment market with a strong payment infrastructure and high consumer preference for electronic payments. Whilst the COVID-19 pandemic and the uncertainty associated with it impacted card payments, the resumption of business activities and recovery in consumer spending will bring it back on its high growth trajectory,” concluded Challa.