âDigital transactions have increased a lot this year, which has boosted the use of credit cards. At the same time, e-commerce companies have come up with lucrative discounts and offers during the holiday season, further increasing spending, âsaid Parijat Garg, a former credit bureau. official and expert in digital lending.
Garg expects spending in November to be significant as well. The busy holiday season and strong demand for travel and hospitality will help keep the momentum going.
Spending on credit cards is increasing more than debit cards, data shows. This, Garg said, is because debit card spending is diverted to payments through UPI. âDebit cards and UPI have a very similar use case, but the latter has deeper penetration (both for users and points of acceptance) and is suitable even for low value transactions. So we are seeing mobile payments with zero MDR gradually taking over the debit card volume, âhe said. âCredit cards are still relevant for high value transactions because they offer a line of credit, unique offers and even reward points. “
Sumit Bali, president of retail loans and payments at Axis Bank, said the increase in travel has been a big contributor to the increase in spending in recent months.
âOctober has been a unique month and has been well placed to take advantage of festivities like Dussehra and Diwali. At the same time, the number of credit card users is also increasing, thanks to the ease of EMI conversion and a plethora of ‘offers,’ he said. .
October also saw an increase in the number of new credit cards issued, possibly due to the return of HDFC Bank Ltd. on the market after eight months. In mid-August, the RBI lifted the embargo on the bank against issuing new cards.
According to a report by Macquarie Research, HDFC Bank successfully added 13,66,000 cards in October, the first in two years. However, it continues to lose market share to ICICI Bank Ltd. and the State Bank of India.
“It will take about two to three quarters for HDFC Bank to regain lost ground in credit cards,” the report said. “ICICI’s co-branded card with Amazon has helped them significantly expand their credit card business.”