Never mind talk of a downturn in the economy. Indians have been happily splurging with credit cards.
Even as the number of credit cards issued by banks declined over the last two years, the average amount of annual purchase made by an existing cardholder went up to Rs 42,000 crore in 2010-11 from Rs 33,335 crore in 2009-10. This translates into a growth rate of over 25%, the annual payment card industry survey 2011 by Atos Worldline, which provides services for electronic transactions, has revealed.Credit card spends increased by 22% year-on-year to Rs 75,516 crore at points of sale (POS) in 2011 compared to Rs 61,824 crore in 2010, the survey based on industry data said.
The number of credit cards issued in the country, however, declined in 2011 to 18 million from the previous year's card base of 18.5 million, with most banks and card issuers adopting a cautious approach amid a credit crunch in the economy going through a downturn.
The annual average debit card spending at merchant POS was Rs 1,698 at March 2011.
Industry experts said that while earlier the card base was larger, many card holders had multiple cards, some of them inactive. In contrast, today's customers are acquiring credit cards for usage, not just as backup or as a symbol of prestige. Co-branding of credit cards that helps customers in getting discounted deals, and reward points for purchases are also helping plastic money deals, they say.
“The focus now has shifted away from increasing the credit card base recklessly,” Kadambi Narahari, CEO, SBI Cards and Payment Services, a joint venture between General Electric and State Bank of India told HT.
Banks are also focusing more on what people do with their cards, instead of issuing them.
“The focus is on increasing spends rather than increasing the customer base and to boost usage most banks and card issuers are designing various ways to increase spends on the plastic money,” said the chairman of a public sector bank on the condition of anonymity.