Credit Card Spending Surges Nationwide

Credit Card Spending in India Soars to Rs 2 Lakh Crore

The Reserve Bank of India (RBI) revealed a significant surge in credit card spending in India, crossing Rs 2.02 lakh crore in October 2024. This marks a 14.5% increase from September and a 13% year-on-year growth. The rise reflects a robust festive season and growing consumer reliance on digital payments.

Credit Card Spending Surges Nationwide

Record-High Credit Card Transactions

Credit card usage saw unprecedented growth in October, driven by:

  • Festive Shopping: The festive season prompted increased spending across categories.
  • Promotional Schemes: Attractive offers like equated monthly installments  (EMIs) encouraged higher usage.
  • Rising Credit Card Numbers: The total number of credit cards in circulation grew by 12.85% year-on-year, reaching 106.88 million.

Leading issuers contributing to this growth include:

  • HDFC Bank: 241,119 new cards issued.
  • SBI Cards: 220,265 new cards issued.
  • ICICI Bank: 138,541 new cards issued.

Digital Payments Drive Transformation

The share of digital payments in India more than doubled from 14-19% in March 2021 to 40-48% in March 2024. A key contributor to this shift has been the Unified Payments Interface (UPI), which has revolutionized how Indians transact.

  1. UPI’s Exponential Growth:
    • UPI transactions recorded a 75% Compound Annual Growth Rate (CAGR) from August 2019 to August 2024.
    • UPI spends surged at 68% CAGR over the same period.
  2. Impact on Debit Cards:
    • Debit card-based transactions declined by 8%, from Rs 43,350 crore in August to Rs 39,920 crore in September.

Credit Cards Maintain Their Ground

Despite the growing dominance of UPI, credit card spending in India continues to rise. Key highlights include:

  • Credit card transactions increased by nearly 5% from Rs 1.68 lakh crore in August to Rs 1.76 lakh crore in September.
  • The festive season and promotional offers played a significant role in sustaining credit card growth.

UPI vs. Credit Card Transactions

While UPI dominates in transaction volumes, credit cards hold a firm position in higher-value transactions:

  • UPI transaction volumes are 38.4 times higher than credit card transaction volumes.
  • However, due to the smaller ticket size of UPI transactions, the UPI-to-credit card spend ratio remains at 0.3 times.

This indicates that while UPI facilitates a larger number of transactions, credit card spending in India continues to cater to higher-value payments.

What Drives Credit Card Spending Growth?

Market experts attribute the rise in credit card usage to:

  1. Economic Recovery: A rebound from the lower base of the previous year.
  2. Consumer Behavior: Increased consumer spending during festivals.
  3. Innovative Offers: Financial institutions offering cashback, discounts, and easy EMIs.   

 

  1. In October, credit card spending in India surged to Rs 2 trillion (US$ 2.38 billion), marking a 14.5% increase from September, driven primarily by festive season purchases. According to the Reserve Bank of India (RBI), this spending represents a 13% year-on-year growth

Future Trends in Digital Payments

The rise in credit card spending in India highlights a broader trend of digital payment adoption. However, the competition between UPI and credit cards indicates that the payments ecosystem is evolving rapidly.

  1. Collaborative Opportunities:
    • Banks and fintech companies could explore synergies between UPI and credit cards to provide seamless payment experiences.
  2. Expanding Credit Access:
    • With over 106 million credit cards in circulation, expanding access to smaller towns and rural areas could further drive growth.

Conclusion

The milestone of Rs 2 lakh crore in credit card spending in India for October 2024 reflects a significant shift in consumer behavior and economic activity. While UPI continues to dominate transaction volumes, credit cards remain a preferred mode for high-value purchases. This dynamic interplay underscores the evolving nature of India’s digital payments ecosystem.

Disclaimer

This article is based on RBI data and publicly available market insights. Readers are advised to refer to official sources for precise and updated information on India’s credit card and digital payment trends.

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