As credit card spends rise, debit cards have shown a decline in the last two years; This post-pandemic shift is noteworthy, especially as both debit and credit cards had consistently shown growth in transaction volume and value until FY21.
India is experiencing a notable shift in its payment landscape, with credit card transactions taking precedence over debit cards, according to data from the Reserve Bank of India’s Handbook of Statistics on the Indian Economy for the fiscal year 2022-23 (FY23).
In FY23, credit card spending witnessed a remarkable surge, reaching Rs 14.32 lakh crore, marking a substantial 47.4% increase compared to the previous year. The number of credit card transactions also saw a significant uptick, rising from 224 crore to 291 crore.
As of March 2023, India had approximately 8.5 crore credit cards in circulation, a 15.9% YoY increase.
Contrastingly, the usage of debit cards displayed a declining trend, with spending decreasing from Rs 7.30 lakh crore in FY22 to Rs 7.19 lakh crore in FY23. Concurrently, the volume of debit card transactions dwindled from 394 crore to 342 crore.
This post-pandemic shift in payment dynamics is noteworthy, especially considering the historical trend where both debit and credit cards had consistently shown growth in transaction volume and value until FY21.
Factors contributing to the credit card surge include the growing adoption of credit, affordability of point-of-sale (PoS) purchases through options like EMIs, convenience, utility, and heightened awareness of credit card benefits.
UPI blow
Since the pandemic, the more convenient Unified Payments Interface (UPI) has taken over as the preferred choice for payments by consumers, even online, and that is being reflected in the Reserve Bank of India’s data.
In July 2020, the total debit card spends stood at Rs 2.81 lakh crore, as compared to Rs 3.15 lakh crore in July 2023, reflecting a growth of 11.96 per cent.
On the other hand, UPI spends have seen a whopping growth of 428 per cent, zooming from Rs 2.90 lakh crore to Rs 15.33 lakh crore during the same period, the data revealed.
The other reason for the rise in UPI spend is convenience for micro transactions, just a few clicks by the customer, mostly after aiming the scanner.
