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Credit Card Transactions Are Bouncing Back
From 52 million credit card users in 2019, and 57.3 million in 2020, the overall credit card in circulation has reached 64 million in 2021.
Photo Credit : Shutterstock
While the credit card spends in India saw a big dip in usage during the pandemic period of the last 18-months, there is an upswing now reveal the latest set of data set. The biggest sign of encouragement is the Average Ticket Size (ATS) has shown a steady increase and is up 25 per cent from pre-pandemic levels of January last year
Arvind Ronta, Head of Products, India and South Asia, Visa explains, "After the first prolonged lockdown, there was a pent-up demand that resulted in card spends recovering quick, with issuers and merchants running campaigns to revive spends. Secondly, people turned more to eCommerce and transacting online for essential as well as discretionary purchases while using the Credit Cards for higher ticket size purchases, thereby increasing the ATS.”
As per industry reports, there was a slight dip in the number of new credit cards being added from April to July 2020 period that seems to be reversing now with an increase in new cards in the past few months of 2021 when compared to the same period in 2020. However, it must be underlined here that the overall penetration of Credit Cards in India remains low. Around 5 in 100 people currently owns a credit card in India.
Prasad Sonavane- Chief Revenue Officer, Innoviti, says, “The consumer spending trend had been restrained due to market conditions. Also, the new trend of reduced spends in other areas like housing, cars etc, since younger people prefer usage rather than ownership, means that there is a big chunk of the wallet which gets released for spends of a non-asset nature.”
As per a report from the Reserve Bank of India by March 2021, the spend per card had fully recovered to pre-pandemic levels of January 2020. However, post the second wave of coronavirus onslaught, it went down 20 per cent when compared to what it was in June 2020.
TechSci Research claims that the factors which are fuelling the growth of this market are attractive offers on the usage of credit cards, growing acceptance of credit cards, increasing co-branded card offerings, the rising spending power of millennials and Gen Z, and gradual shifting of people towards cashless transactions.
“There is clearly a huge headroom for growth. It should be no surprise to anyone that India is a very strategic market for us where our total cards in force are approx. 1.5 million,” says Manoj Adlakha, SVP and CEO, American Express Banking Corp. India.
Ankur Maheshwari, CFO, Freo also avers, "During covid, even in our credit cards disbursement rates, there was a dip of one-third in transaction volumes, however, and we are looking at a strong recovery as markets open, and we are already up by 10 percent now close to 1.5 years of the pandemic."
Post demonetization and later after the Covid pandemic, accelerated digital transactions are also giving a further leg up in the Credit Card market. According to industry body, ASSOCHAM, the digital payments market in India is expected to more than double to $135.2 billion by 2023 from $64.8 billion this year.
Vikas Bansal, Director - Amazon Pay India adds: "In this past year, we have observed a significant rise in the use of digital payments. The popularity of credit cards is also seeing an upward trend. With smart saving modes like discounts, cashback, and reward mechanism, these credit cards have attracted wide demography of customers.”