BY BEN EGUZOZIE
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Digital issuance platforms expand into new markets
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Africa penetration low
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2.6% Nigerians own credit cards
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Nigeria penetration at 0.6%
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To increase to 1.8% by 2028
Credit cards will account for $9.7 trillion in total spending globally by 2027, providing a huge opportunity for card issuers to drive revenue growth by choosing the optimal credit card strategy, as rising affluence in emerging markets poses a significant driver of credit card adoption.
As digital card issuance platforms expand into new markets, a new study from Juniper Research has found that the number of credit cards issued via digital card issuance platforms will exceed 321 million globally by 2027, from 120 million this 2023.
This growth of almost 170 percent reflects the use of new advanced digital capabilities such as digital loyalty schemes and instant issuance, as card issuers aim to combat competition, including from buy now pay later.
Digital card issuance platforms allow card issuers to create cards using an API-driven approach; enabling cards to be delivered instantly to digital wallets, with the option for a physical card; and thus boosting flexibility significantly.
With a global $9.7 trillion opportunity, it was found that credit cards issuance will be critical to addressing the $9.7 trillion in spend globally by 2027, according to a new report, “Credit Cards Strategies: Innovation Analysis, Digital Transformation & Market Forecasts 2023-2027”.
According to the report, this represents a significant opportunity for card issuers to drive revenue growth by choosing the optimal credit card strategy, as rising affluence in emerging markets poses a significant driver of credit card adoption.
As such, digital card issuance platforms are critical to delivering credit offerings in these mobile wallet-dominated markets.
Nick Maynard, research co-author, explained further that, “In emerging markets, the ability to instantly issue digital cards will be a key factor in users choosing credit cards over other payment methods. Card issuance platform vendors must ensure localisation to enable cards to be quickly pushed to the wallets popular in each market.”
Penetration of credit cards issuance is still low in Africa, though the continent has a vibrant youth population with a taste for tech and digital payments.
In Nigeria, a report by Statista said 2.6 percent or 726,000 of the population own credit cards as of the end of 2021. The penetration level is 0-6 percent, and is expected to rise to 1.8 percent by 2028. This is quite low when compared to 45.14 percent of Nigerians who have accounts with financial institutions as of 2021, according to Globaleconomy.com. Also, Nigeria is one of the top three unbanked countries in the world, with 40 percent of its population without a bank account; and out of the 59 million unbanked adults, 73 percent do not have the essential documents to open a tier-three bank account.
The research predicts that by 2027, the monetary value of rewards for users from credit card use will reach $103 billion globally, driving overall adoption. It recommended that card issuers focus on app-based loyalty to maximise the appeal of these rewards; partnering with well-connected digital loyalty programme providers to maximise their appeal. Should issuers fail to do this, they will lose out to better-connected vendors in a highly competitive credit cards market, the report warned.
