New Zealand among the world's most profitable credit card markets

New Zealand among the world's most profitable credit card markets

By Gareth Vaughan

New Zealand is among the world's most profitable markets for credit cards and Australia has the world's highest average spend per credit card, according to the London-based Lafferty Group.

In a report on the top 10 most profitable global credit card markets, Lafferty notes Australia has the highest average spend per credit card in the world at just under US$15,000. 

"Australia has by far the largest billed volume per credit card in the world. Australia's billed volume per credit card is more than seven times that of Japan and eleven times that of Brazil," says Lafferty.

"Australia has a population of just 23 million, compared to 314 million in the US. Despite, Australia’s small size it packs a pretty strong punch in terms of overall pre-tax profits. At just over US$3 billion in 2012, Australia’s pre-tax profits were more than double that of Mexico, which has a population five times its size," Lafferty says.

And in separate research, Lafferty says; "New Zealand is one of the world’s most profitable credit card markets. Profit per card increased by 11% in 2011 to reach US$117 and is estimated to reach US$119 in 2012."

Lafferty describes itself as a provider of advanced knowledge services to the global financial industry.

According to Lafferty, there were 2.7 million issued credit cards in New Zealand at the end of 2011, representing a penetration rate of approximately 78% of adults.

"New Zealanders use credit cards for short-term borrowing, which is illustrated by the high rollover rates on credit card outstandings (ie, proportion of debt that rolls over into interest bearing balances), or 68.1% at the end of 2011," says Lafferty.

"While annual fees have fallen in recent years, New Zealand remains one of the few advanced credit cards markets where annual fees are collected."

Whilst credit cards may be popular, New Zealanders are even more enamoured with debit cards. Lafferty says we had 6.6 million of them at the end of 2011, the equivalent of about two per adult.

Given the popularity of both credit and debit cards, Lafferty says New Zealand consumers are among the world’s most frequent users of payment cards for purchases, with 292 point of sale transactions per adult in 2011.

"Spend per card is also relatively high, averaging US$5,253 for all payment cards, which is one of the highest rates in the world."

According to Reserve Bank figures, New Zealanders had NZ$5.6 billion owing on credit cards as of the end of May, with a weighted average interest rate on interest bearing advances of 17.7%.

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Interesting that the number of credit cards per hundred dropped in 2009 (post-GFC, people 'cutting them up'?). Since then, a slow increase back towards that 2008 high of 80 per hundred.
 
As they say, become the kind of credit card user the card companies love to hate: Use the interest-free period, get the reward points, and pay the balance in full, on time.

The card companies make a % on every transaction so as long as you use the card, they still like you

Aside from petroleum products, this would have to NZ's most colluded market; In the US it is almost unheard of to be charged an annual fee, or even more recently, late fees. On top of that, spending generates rebates of between 1 and 5c on the dollar, which if you time well can be transferred for restaurant gift cards at another 20% discount.

I'm really annoyed at ANZ's airpoints credit card. When I applied 2 years ago, ANZ's card was the airpoints cheapest card with the best airpoints reward rate. Now it has the highest fee in the market and they've recently decreased the reward rate to the market average. 

How else can you pay for something online? I am sure that adds to the use of cards.
There is a definate lack of reasonable alternative - debit cards are used the world over, and little here.

Apparently we are keen to pay credit card interest fees.  At least we are consistent in our ability to be poor, but accept the most expensive, least useful choices.