Country reports: Canada, Portugal, Singapore, China, Latvia and The Philippines

Interac continues to dominate debit card market
The payment card market in Canada is mature, with each individual holding at least three cards in 2020. Canadian consumers are avid users of card payments, which account for 65.9% of the total payment transaction volume in 2020. Persistent efforts from the country’s financial authorities and banks to ensure a robust banked population by offering low-cost bank accounts, a high level of awareness of electronic payments, and increasingly developing payment acceptance infrastructure have been successful in encouraging consumers to use electronic payment methods for day-to-day, recurring transactions.

As a result, the frequency of card payments increased during the period 2016–20, rising from 92.6 times per card per year in 2016 to 110.9 times in 2020; the figure is set to reach 132 times by 2024.

Contactless posts strong growth
Besides cards, the rising preference for contactless payments, the growing e-commerce market, and the rise in the number of payment innovations such as cashier-less stores, payment accessories, cryptocurrency payment cards, as well as alternative payment methods such as PayPal, Google Pay, Apple Pay, among others, have further resulted in an increased preference towards cashless modes of payment.

Additionally, the ongoing pandemic has propelled the shift in preference towards cashless payment methods, even though there has been an adverse impact on the level of consumer spending and the payments industry.

Interac operates the national debit card scheme, and has a monopoly over the Canadian debit card market. Interac debit cards have a wide acceptance network in the country and are equipped with contactless functionality.

As of December 2020, there were 24.2 million active Interac debit users on average per month. To further expand its payment acceptance network, Interac partnered with the multinational retail corporation Walmart Canada in November 2020 to enable the acceptance of its debit card payment methods for both in-store and online transactions at Walmart.

Credit and charge cards remain the preferred method of making payments
Credit and charge cards accounted for 68.6% of total card payment value in 2020. Canada has the highest credit and charge card penetration among its peers. In this mature market, banks are focusing on boosting card usage by offering various instalment plans, discounts, reward programmes, and cashback. Consequently, the credit and charge card payments have registered healthy growth in terms of both volume and value, recording respective compound annual growth rates (CAGRs) of 7.9% and 5.9% for the period 2016-2020.

The Covid-19 pandemic is aiding e-commerce growth
The Canadian e-commerce market is consistently developing and registered strong CAGR of 17.1% for 2016-2020, increasing from C$53.5bn ($41.29bn) in 2016 to $77.63bn in 2020. Growth can be attributed to strong internet penetration in the country that complements the increased preference of Canadians for online shopping. The outbreak of Covid has further boosted online purchases of essential goods as this helps consumers to avoid close social contact.

With a boost in consumer demand for shopping online, traditional retailers are turning to online platforms to increase their sales. In July 2020, Canadian e-commerce company Shopify partnered with the Government of Canada to introduce the “Go Digital Canada” initiative that offers resources and tech support to small businesses in Canada in order to enable them to launch their online marketplace for free.

Prepaid cards serve a diverse set of purposes and offer a range of benefits
The prepaid card market in Canada is on a consistent rise with the transaction value and number of prepaid cards registering healthy 2016-2020 CAGRs of 7.1% and 12%, respectively. This is a trend that is anticipated to continue over the period (2020e–24f). A wide range of prepaid cards are available, including general purpose reloadable cards, payroll cards, corporate disbursement and incentive cards, government disbursement cards, gift cards, and travel cards.

To capitalise on the growing demand for digital rewards and incentives, in February 2021, the American fintech company Blackhawk Network launched a Mastercard-branded virtual gift prepaid card in Canada that offers faster issuance and redemption than physical gift cards. These virtual prepaid cards range in value from $0.77 to $770.71 and can be used for both domestic and international transactions.

Cash displacement accelerates
Cash remains the preferred method of consumer payment in Portugal, accounting for 49.2% of overall payment transaction volume in 2020. However, the share of cash payments has been declining due to the increased adoption of electronic payments and improving payment infrastructure.

Payment card frequency in the country stood at 105.3 times per card per year as of 2020 – much higher than peers such as Spain (76.2), Greece (63.4), and Germany (57.8). The Portuguese payment card market is mainly driven by debit cards, which accounted for 96.3% of overall card payment value in 2020.

Credit cards are not very popular in Portugal, accounting for only 3.7% of overall card payment transaction value in 2020; this is primarily due to the debt-averse nature of Portuguese consumers. However, banks offer them as part of bundled packages to increase uptake, and also provide various value-added benefits in the form of instalment payments, reward programs, cashback, and discounts to increase usage.

Meanwhile, the emergence of ecommerce and rising adoption of contactless payments will further aid the transition towards a cashless society. The outbreak of Covid-19 has affected the economy, impacting all sectors (including cards and payments) due to a decline in overall consumer spending. But the pandemic has also highlighted the importance of non-cash payment tools, which will further boost the usage of electronic payments in the country.

Debit cards remain the preferred payment card
Debit cards are the most popular card type for payments, driven by a high banked population and prudent consumer spending. Debit card penetration remains high in Portugal, with every individual holding almost two cards in 2020. The availability of basic bank accounts and a focus on digital channels has helped strengthen their position. The growing popularity of contactless payments and the emergence of digital-only banks is further expected to drive debit card payment growth over the forecast period.

Ecommerce growth is driving electronic payments
The Portuguese ecommerce market grew significantly during the period 2016-2020, rising from €3.8bn ($4.2bn) in 2016 to $9.2bn in 2020. Growing internet and smartphone penetration coupled with the country’s large young population have supported this growth.

The country’s Association of Electronic Commerce and Interactive Advertising promotes ecommerce activities via various events. The latest Portuguese Internet Shopping Day was held on October 23, 2020, during which customers were offered a range of discounts and vouchers for online purchases.

The coronavirus has significantly impacted consumer spending – particularly in sectors such as travel and tourism as well as food and drink. According to the Portuguese Hotels Association, the hotel industry suffered a revenue loss of $1.46bn to $1.57bn between March and June 2020 due to cancellations and lost bookings.

Meanwhile the fear of contamination has resulted in changes in consumer buying behaviour, with a growing preference for online shopping and contactless payments. To promote contactless payments, the central bank increased the contactless payment limit in March 2020.

Prepaid cards are used for a variety of purposes
The number of prepaid cards grew from 2.6 million in 2016 to 3.7 million in 2020. Banks in Portugal offer prepaid cards targeting different consumer segments, such as children, shoppers, and travellers. For example, Novo Banco offers the Pocket NB prepaid card for young individuals over 12 years old. Card holders can link the card with the MB WAY app and make payments using their mobile phone.

Similarly, Millenium bcp offers the Free Junior Visa prepaid card to individuals aged under 17. Banks also offer prepaid cards for gifting purposes. Banco BPI offers BPI Cash Present, a Visa-branded prepaid card used for gifting.

Card acceptance at POS terminals posts strong growth
The number of POS terminals recorded a 2016-2020 CAGR of 5.8%, increasing from 303,500 in 2016 to 380,243 in 2020. With a number of banks issuing contactless cards, retailers are installing POS terminals that accept contactless payments. Major banks in Portugal are offering and supporting contactless payments. The number of POS terminals with active contactless technology offered by CGD increased from 25,000 in 2018 to 33,171 in 2019.

Domestic scheme NETS leads the way
Singapore’s payment card market is rapidly growing and innovative. Efforts from the government, financial authorities, and banks to ensure a robust banked population, a high level of awareness of electronic payments, and developing payment acceptance infrastructure have encouraged consumers to use electronic payment methods for day-to-day transactions. Growth in the payment card market during the period 2016–20 was characterised by the rise of contactless payments, a surge in credit and charge card payments, and the increasing use of mobile wallets.

The use of mobile wallets is on a par with contactless payment cards, and it is likely these payment methods will see strong growth going forward as growing numbers of merchants and hawkers are accepting payments via mobile wallets.

Contactless card numbers and usage saw robust growth during the four years to 2020, with the vast majority of contactless users in the country seeing these cards as helpful. Strong growth was also seen in instant payments as both consumers and businesses increasingly used online and mobile banking to make payments and transfer funds. Covid-19 has impacted consumer spending, in turn affecting the payments industry. Yet the pandemic is aiding the shift from cash payments to digital payment tools, with the use of contactless cards and mobile wallets expected to rise further.

Low charges boost NETS dominance
NETS operates the domestic debit card scheme, enabling customers of partner banks to make payments using their debit cards or mobile phone at more than 120,000 acceptance points, as well as online. The NETS network also accepts NETSPay, UnionPay, and BCA cards, and includes 54,000 unified POS terminals and 96,000 QR code acceptance points. High acceptance among merchants and low charges have helped NETS dominate the debit card space. NETS also enables card holders to make contactless payments with NETS FlashPay, which it is also accepted for contactless transport payments.

Covid is accelerating contactless payments
Singapore’s contactless card market is highly developed. Over the years, contactless payments have gained mainstream traction due to major banks offering this technology and retailers adopting supporting infrastructure.

Overall, the number of contactless cards increased from 25.0 million in 2016 to 28.6 million in 2020. Amid the pandemic, mobile contactless payments are also growing. According to Visa’s 2020 Consumer Payment Attitudes Study, 56% of Singapore consumers are using mobile contactless payments – up 12 percentage points compared to 2019.

Covid is also aiding ecommerce growth
Ecommerce in Singapore has registered strong growth, rising from S$5.7bn ($4.2bn) in 2016 to $6.9bn in 2020 at a CAGR of 13.1%. Amid Covid, major online shopping platforms including Shopee, Lazada, ezbuy, and Amazon have witnessed strong spikes in online sales.

Ecommerce growth was also supported by shopping festivals such as Black Friday, Cyber Monday, Great Singapore Sale, and Lazada Birthday Sale. Meanwhile, the likes of Apple Pay and PayPal are increasingly being used for online purchases.

Singapore’s prepaid card market is saturated
Prepaid cards are widely used by Singaporeans. Popular formats include travel and virtual cards. In Singapore, prepaid cards are automatically associated with the EZ-Link contactless transit system, which consumers have used extensively since its launch in April 2002 – even for non-transport payments. In August 2020, EZ-Link partnered with Malaysia’s Touch ‘n Go cards to launch a dual-currency card for transport payment in both Singapore and Malaysia. EZ-Link x Touch ’n Go Motoring Card holders can top up the EZLink e-wallet and the Touch ‘n Go e-wallet in Singapore and Malaysia respectively.

Improved payment infrastructure drives electronic payments
The number of POS terminals recorded a strong 2016-2020 CAGR of 9.7%, increasing from 186,259 in 2016 to 270,082 in 2020. With a rise in contactless payments, the number of POS terminals is expected to grow to 316,695 by 2024.

With the increased number of POS terminal installations at retail outlets, the country’s card-based payment potential also grew during the review period. Companies are launching low-cost QR code-based payment solutions. For instance, in April 2020, Maybank Singapore and Liquid Group rolled out an all-in-one QR payment terminal solution that allows merchants to accept QR code-based payments via PayNow.

The terminal supports the mobile banking apps of all PayNow participating banks. The terminal can also accept non-bank mobile apps such as UnionPay QR, WeChat, and GrabPay, among others.

International schemes finally gain access to Chinese market
China is the world’s largest payment card market, in terms of transaction value: $19.3tn in 2020. This is higher than developed markets such as the US ($7.9tn) and the UK ($1.2tn). The country’s central bank, People’s Bank of China (PBOC), and card issuers have launched initiatives such as providing insurance on deposits, enforcing a cap on merchant service fees, and making efforts to change consumer payment habits. As a result, payment cards are gradually becoming more accepted, with their use growing during the four years under review to 2020.

Meanwhile, mobile payments have gained widespread adoption, with Chinese consumers generally preferring mobile payments such as Alipay and WeChat Pay for day-to-day, low-value transactions. Innovative features such as QR code payments, facial recognition, and NFC payments are being integrated with mobile payments to enhance customer convenience, posing a challenge to the overall payment card market.

China, which was the first country to be hit by Covid, was also early on a path to recovery, with few cases being reported due to the government’s stringent measures. Although the pandemic has affected the growth of the payment card market, it has further propelled the shift in preference toward cashless payment methods. This, in turn, will support the growth of the payment card market.

Following a complaint by the US against China with regards to discrimination against foreign companies in 2012, the World Trade Organisation directed the Chinese government to open up its payment card market to foreign operators. In June 2020, American Express became the first foreign card network to secure a license to clear domestic card payments in China. Earlier, in February 2020, Mastercard received approval from the PBOC to set up a domestic clearing system. Meanwhile, Visa is still looking to enter the Chinese payment market. However, they are all still a long way from taking substantial market share from China UnionPay (CUP).

Mobile wallets have become mainstream payment tools
Mobile wallet adoption is very high in China. Mobile wallet transactions registered robust growth, rising from CNY51.0tn ($7.3tn) in 2016 to $37.3tn in 2020, at a CAGR of 50.2%. This trend is likely to continue over the coming years. Mobile wallets have become a mainstream payment instrument in China, and are widely used for day-to-day transactions at supermarkets, street stalls, and on public transport, and are also used for online payments.

Alipay and WeChat Pay are household names and widely accepted in stores. Mobile wallets have gained further prominence since the start of the pandemic.

Covid further accelerates ecommerce growth
China is the largest ecommerce market in the world. The market has recorded significant growth, posting a 2016-2020 CAGR of 18.3% to increase from $0.9tn in 2016 to $1.8tn in 2020. Growth was buoyed by rising consumer confidence and improving ecommerce activities in rural areas.

According to China’s Ministry of Commerce, online retail sales in China’s rural village communities increased more than eightfold during 2014–19. Due to the restrictions on international travel during the pandemic, Chinese consumers turned to ecommerce in order to make purchases from overseas luxury brands.

Prepaid card regulations tighten
To prevent corruption using prepaid cards, in May 2011, PBOC issued guidelines for e-payment licenses to selected third-party payment service providers. Thereby, the strict regulations associated with the prepaid card market have caused several prepaid card issuers to cease the issuance of prepaid cards.

In 2018, for instance, there were 137 prepaid card issuers in China, down from 153 in 2017. This resulted in a decline in the number of prepaid cards in circulation during the review period.

Card acceptance at POS terminals on the rise
While ATM numbers are falling, the number of POS terminals rose at a 2016-2020 CAGR of 8.6%. The growth of the payment card market has encouraged international payment service providers to offer POS solutions. In China, Verifone offers a broad range of payment solutions such as mobile smart terminals, desktop terminal or password keyboard, handheld mobile POS (mPOS) terminal, and peripheral accessories. Biometric payment terminals are also emerging in the country. In January 2020, payment terminal manufacturer Sunmi launched the Sunmi P2 handheld POS terminal, which supports fingerprint payment.

The device also supports more traditional payment methods such as magnetic stripe cards, chip cards, NFC, and QR code. To avoid setup cost for the merchants, payment service providers are also providing low-cost solutions such as smartphone-based POS systems.

Debit cards remain the preferred payment card
The Latvian payments market is steadily shifting towards electronic payments. There has been significant progress in the adoption of card-based payments. It is estimated that for the period 2017-2021 the sector will post compound annual growth (CAGR) of 10.4% in terms of the volume of transactions.

This can be attributed to the combined efforts of the government and financial institutions to boost financial awareness through the launch of financial literacy programmes, provision of basic bank accounts, and expansion of the acceptance of payment cards among retailers.

Consequently, the overall card payment transaction value recorded 2017-2021 CAGR of 7.1% - a trend that is anticipated to continue over the coming years. In addition, the frequency of card payments also rose at a strong CAGR of 12% from 115.1 times per card in 2017 to 181 in 2021; this figure is set to climb to 228.6 by 2025.

The proliferation of digital-only banks, alternative payment methods, and growth in the ecommerce market are all anticipated to support Latvian payment card growth going forward. Although the Covid pandemic has impacted consumer spending, it has also highlighted the importance of non-cash payment methods, pushing the usage of electronic payments in the country.

Government financial inclusion drive pays off
Debit cards are the most popular card type in Latvia. This can be attributed to the high bank account penetration, which stood at 94.8% in 2021, and the multiple steps taken by the government and commercial banks to promote financial inclusion and drive debit card penetration. Debit cards are frequently used for low-value, day-to-day transactions, with their card payment frequency standing at 189.8 transactions per card in 2021, up from 121.1 in 2017. Similarly, the number of debit card payments registered strong growth both in terms of volume and value, recording respective CAGRs of 12% and 12.2% for the four years to 2021.

Credit and charge cards are at a nascent stage
Credit and charge cards are not very popular in Latvia, with card penetration remaining low at only 13 cards per 100 individuals in 2021. The reason for such low card penetration can be attributed to the debit-conscious nature of the Latvians and the prevailing use of debit cards in the country. Furthermore, there are stringent application requirements for issuing credit cards in the country and the cards are only issued to customers with a sound financial background.

However, despite low penetration, their frequency of use recorded a 2017-2021 CAGR of 6.6% as a result of the lucrative benefits provided by these cards.

Ecommerce is registering robust growth
The Latvian ecommerce market expanded at a 2017-2021 CAGR of 12.5%, rising from €267.0m ($326.49m) in 2017 to $522.62m in 2021. Growth was supported by rising internet and smartphone penetration, as well as an increasing number of ecommerce retailers.

Improved logistics and product delivery systems also contributed to growth in the Latvian ecommerce market. Moreover, the pandemic has further boosted online purchases of essential goods as this helps consumers avoid close social contact. Several traditional businesses are increasingly shifting to online platforms to cater to the changing preferences of their customers.

Contactless limit increase
In the wake of the spread of Covid, in March 2020, the Finance Latvia Association raised the limit on contactless cards in the country from $30.57 to $61.14, in a bid to encourage consumers to use contactless payments rather than cash for purchases of essential items. As a result, consumers do not need to enter their PIN for payments worth up to $61.14.

The volume of transactions at POS terminals in Latvia rose from 271.9 million in 2017 to 403.4 million in 2021, CAGR of 10.4% This highlights the growing preference for electronic methods of payment. In November 2019, Citadele Bank, in partnership with Latvia-based payment processor ASHBURN International, launched its “Instant POS Terminal” service in Latvia. Through this service, merchants can instantly obtain mobile POS terminals from Citadele Bank’s branches, and the terminal is activated within two to three hours during bank working hours.

Cash remains dominant
Cash remains the most popular method of payment among consumers in the Philippines and accounted for 98.1% of the country’s total payment transaction volume in 2020. This is mainly due to the high unbanked population, inadequate banking infrastructure, limited public awareness of electronic payments, and the low acceptance of payment cards at merchant outlets.

However, with concentrated efforts by the Filipino government and the Bangko Sentral ng Pilipinas (BSP) — the country’s central bank — the share of cash is anticipated to decline gradually over the forecast period 2020–2024. As part of the government’s financial inclusion plan, several micro-banking offices, electronic money issuers, microfinance providers, pawnshops, and remittance agents are being employed to provide access to financial services in unbanked or underserved areas.

Consequently, due to the number of payment cards in circulation, transaction volume and transaction value recorded a robust CAGR for the four years to 2020 — a trend that is anticipated to continue. The rising investment in POS infrastructure and the proliferation of new payment solutions will further push electronic payments in the Philippines. This will also be supported by the emergence of digital banks and growth in the ecommerce market.

The outbreak of Covid has affected the economy, impacting all sectors (including cards and payments) due to a decline in overall consumer spending. However, the pandemic has also highlighted the importance of non-cash payment tools, which are pushing electronic payments in the country.

Financial inclusion to aid debit card growth
The percentage of the banked population (aged 15+) in the Philippines increased from 33.5% in 2016 to 37.3% in 2020. To further enhance financial inclusion, the central bank, from 2018, started allowing banks to establish smaller bank branches called branch-lite units.

These locations can offer a wide range of financial products and services such as bank accounts and debit cards to fulfil the needs of the market, especially in areas that are unbanked and underserved. The government's financial inclusion programme will drive demand for banking products such as bank accounts and debit cards.

Credit card market is in a developmental phase
The Filipino credit and charge card market is still in the developmental phase, with overall penetration at just 7.9 cards per 100 individuals in 2020. Despite the low penetration, these cards are commonly used for card payments, which accounted for 62.6% of the total card payments transaction value in 2020. Credit card transactions are driven by the monthly instalment facilities offered by most banks, supported by value-added benefits such as reward points and discounts. The steady rise in the middle-class and young working population also aided credit card adoption and their use.

Ecommerce registered robust growth
The Philippine ecommerce market is one of the fastest growing in Southeast Asia, increasing from PHP103.5bn ($2.04bn) in 2016 to $5.13bn in 2020, at a CAGR of 25.9%. In January 2021, the government launched the Philippine E-Commerce Roadmap 2022, which aims to promote ecommerce adoption among SMEs and increase consumer confidence in online shopping. By January 2021, there were 93,318 online merchants registered with the Department of Trade and Industry. Furthermore, Covid has hastened the shift towards ecommerce.

Prepaid cards use on the rise
Prepaid card transaction value grew from $9.43bn in 2016 to $11.41bn in 2020. Growth of prepaid cards have been supported by the rising use of prepaid cards for ecommerce purchases. Prepaid card issuers target specific consumer segments such as travellers. For instance, PNB bank is offering a PNB-PAL Mabuhay Miles Prepaid Mastercard with multiple currency denominations, including Philippine Peso, US dollars, Japanese Yen, and euros.

In July 2019, Swiss Bankers partnered with Hotelcard, enabling Travel Cash card holders to stay overnight for half price at partner hotels in Switzerland, Austria, Germany, and Italy. The card has a maximum monthly reloadable limit of $1,972 and allows card holders to withdraw funds at all BancNet ATMs.

The card acceptance network remains underdeveloped
The number POS terminals are expected to increase from 68,963 in 2020 to 74,849 in 2024, CAGR of 2.1%. Following the outbreak of Covid, the uptake of POS terminals is gradually on the rise. In January 2021, fuel company Unioil partnered with PayMaya to equip its 70 fuel stations with PayMaya POS terminals, which support payments via other means, including cards and mobile wallets.