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The freebies act as particularly strong drivers with the younger generation paying from house rent to groceries through credit cards that are linked to some app or the other
The UPI storm might have delivered a resounding blow to the debit card business, but their close cousin credit cards have surged, thanks to the lure of freebies and reward points that their usage bestows on the customers.
The Economic Times has reported that credit cards have witnessed average monthly expenditure doubling in flat three years – from Rs 60,000 crore in 2019-20 to Rs 1.2 lakh crore in 2022-23.
The amount has further risen to Rs 1.4 lakh crore in May, lending a further boost to the business.
The freebies act as particularly strong drivers with the younger generation paying from house rent to groceries through credit cards that are linked to some app or the other.
Moreover, a few categories have emerged lately. They didn’t exist earlier but they have recorded a surge. According to Mohit Bedi, co-founder and chief business officer of Kiwi, a platform that offers UPI-enabled virtual RuPay Credit Cards in association with banks, these emerging areas include “travel and entertainment (domestic only) luxury only, and rentals. “…And now you will see education as a category emerging,” Bedi added.
The credit card family is getting a boost to the tune of 2 to 2.5 lakh new customers/users every month and the trend has been visible for the past 18 months, informed Bedi.
Another boost to the users is coming from converts from other instruments. A lot of people from the 30-40 age group who did not swipe credit cards earlier are gravitating toward them due to the allurements of discounts and freebies.
“Credit cards offer more rewards and other freebies because credit card is a 2-in-1 product with a loan and a payments option and hence has a higher earning potential for the bank as compared to a singular payment product like debit card,” argued Chitrabhanu G, senior vice-president and country head, retail asset cards, Federal Bank.
If you have been receiving a lot of phone calls from banks trying to sell credit cards off late, now you know their cumulative effect on the payments domain.