Credit Card users between October and November, India experienced several major festivals, such as Navratri and Diwali. During this festive season, people enthusiastically made purchases of new items. Due to a significant boost in Point of Sale (POS) and e-commerce payments, credit card spending among Indians reached a new record level of 1.78 trillion rupees in October 2023, marking a 25.35% increase. In September 2023, credit card spending was 1.42 trillion rupees.
Transactions at POS increased to 57,774.35 crore rupees, while e-commerce payments rose to 1,20,794.40 crore rupees.
How much was the Credit Card of which Bank used?
Speaking of banks, the credit card spending of the leading HDFC Bank decreased from 38,661.86 crore rupees last month to 45,173.23 crore rupees.
ICICI Bank recorded an increase in credit card spending, reaching 34,158 crore rupees, while Axis Bank saw a growth in credit card transactions, amounting to 21,728.93 crore rupees.
“Axis Bank’s performance is improved this time, considering that Citi cards are now included in the overall card spends,” mentioned a knowledgeable senior banker. “A significant portion of the purchases occurred in electronic, consumer durables, and apparel segments, while travel surprisingly didn’t contribute much to the spending this time,” he added.
Among major credit card users, American Express also showed remarkable growth with a 10.1% increase in spending compared to the previous month. On a yearly basis, there was a significant rise of nearly 35% in spending on American Express cards.
In terms of overall spending, transactions on e-commerce platforms surpassed those at Point of Sale (PoS) terminals in October.
Status of Credit Cards of Government Banks
In the public sector, which refers to government-owned companies, SBI Cards witnessed an increase in spending from 24,966.69 crore rupees last month to 35,406.01 crore rupees.
Increasing Credit Cards
During this period, the number of credit cards in the domestic banking industry, led by private banks, increased from 9.302 crore in September to 9.471 crore in October.
HDFC Bank maintained its top position with 1.918 crore cards, up from 1.883 crore cards last month. In the same period, SBI Cards had 1.807 crore cards, ICICI Bank had 1.601 crore, and Axis Bank had 1.330 crore.
Unicommerce, a prominent e-commerce enablement Software-as-a-Service (SaaS) platform in India, experienced significant business growth in this year’s festive season sales. The platform recorded a 43% increase in order item volumes during the festive season sale month in 2023. Throughout the festive season, 10 sellers successfully processed over a million order items, and more than 100 sellers processed over 1 lakh order items using the Unicommerce platform, as stated in the company’s press release.
Factors of Increasing Credit Card Usage
The increase in credit card users transactions is a result of several factors coming together. The festive season in India typically experiences a surge in shopping, and this year was no exception. Additionally, the increased acceptance and usage of digital payments in a post-pandemic world played a significant role. Moreover, the accessibility of convenient credit through credit cards has encouraged consumers to use this financial tool for their purchases.
Cards in Circulation at Present
The total number of credit cards users in circulation increased to 91.3 million by August 30, up from 89.9 million at the end of July. This surge in credit card spending is attributed to a wider range of categories, including travel, entertainment, and utility payments. Co-branding partnerships between card issuers and major e-commerce platforms, like Amazon, have played a crucial role. Additionally, the growth in collaborative card partnerships between banks and non-banking entities, coupled with the increasing popularity of RuPay credit cards on the Unified Payments Interface (UPI), has contributed to expanding the customer base for credit cards.
RBI’s decision on Unsecured Loans will reduce the demand for Loans
However, going forward, there is a possibility of seeing a lesser increase in debt in the credit card industry due to the Reserve Bank of India’s (RBI) directive to increase the risk weight for unsecured loans.
‘Recently, after observing the RBI circular, which announced a higher risk burden for consumer risk for commercial banks and NBFCs, there is an expectation of some softening in debt growth for the credit card industry. This is primarily due to concerns raised by the regulator, i.e. RBI, in some areas of unsecured loan products.’