All is not that well with the credit card industry since the company is witnessing the credit card numbers plummeting. As compared to a sales of 16 lakh credit cards issued in the month of October 2023, this year ‘s October saw the sales decline significantly by 45% YoY to 7.8 lakh.
The sales in May 2024 stood at 7.6 lakh units.
Credit Card Industry Sees Decline in Additions but Strong Recovery in Spending and Card Growth
As per a report by Anand Rathi, “The industry added 0.78m credit cards in the month vs 0.76m in May’24 and 1.6m in Oct’23, down 33 per cent m/m, 45 per cent y/y.”
However, it also noted a steady recovery in October 2024, with a decent pace of growth in card additions and improvement in cards in force (CIF). Despite this decline, net additions in October 2024 were higher than in June 2024, contributing to a 16 per cent quarter-on-quarter (q/q) rise in cards in force.
The report also highlighted that the total spending through credit cards reached ₹1.78 trillion in October 2024, reflecting a 13 per cent year-on-year growth. In terms of transaction volume, spends grew by 35.4 per cent y/y to ₹433 trillion during the month.
Shift in Spending Habits: PoS Transactions Rise as E-Commerce Share Declines in Credit Card Spending
There has been a shift in the spending composition when it came to the point-of-sale (PoS) transactions and e-commerce.
In the month of October 2024, the e-commerce’s share in total spending value dropped to 61% from earlier 65% in September. On the other hand, the PoS transactions increased from 35% to 39% this month.
As per the report, “PoS and e-commerce volumes continued to move in favour of the former, now approx. 51 per cent, while the latter’s share declined to approx. 49 per cent.”
In transaction volumes, the preference continued to move towards PoS transactions. PoS transactions now account for approximately 51 per cent of total credit card transactions.
Though the growth numbers in card additions look grim, the industry still shows sign of gradual improvement. The increasing cards in force and stable spending trends indicate a steady recovery in the credit card market, even as shifts in spending habits emerge.
The data reflects a cautious but positive outlook for the credit card industry amid evolving consumer preferences. (ANI)
