E-commerce gives a boost to credit cards in India (2024)

With the resurgence in online shopping, use of credit cards to complete transactions is fuelling a surge in usage.

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Data from RBI states sequential growth in credit card spends in the country have grown 8% to Rs 44,980 crore during the first quarter ending June 30 2014 as against Rs 41,861 crore during the last quarter of 2013-14.

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Axis Bank has seen its average monthly credit card spends move up from Rs 400 crore during FY 13 to Rs 725 crore during FY 14. Moreover, during the second quarter of FY 15, the average credit card monthly spends were Rs 1,100 crore for the bank from Rs 650 crore a year ago.

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"A lot of the e-commerce growth is through cards. Customers are getting confident about using chip-based cards too and the sense of security is on the rise," Jairam Sridharan, president, retail lending and payments, Axis Bank said.

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Similarly, HDFC Bank has witnessed a 30% year-on-year growth in second quarter. "Online e-tailing and bill payments and travel have been the main drivers," Parag Rao, senior executive vice president, business head, card payment products and merchant acquir ing services, HDFC Bank said.

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For Kotak Mahindra Bank it's a 33% growth in card spends during the second quarter. "Growth in e-commerce spends coupled with growth in the commercial card spends are the main factors," Sumit Bali, executive vice president, Kotak Mahindra Bank said.

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Bali added that corporate cards have shown maximum spends growth both in year to date (April to November 2014 over April to November 2013) as well as during quarter two.

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"Companies are increasingly using this route of payment for convenience and reconciliation benefits," Bali said.

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The festive season too has played its role too. "A lot of consumer durable spends and electronic purchases have happened via cards this season. Banks too are putting in compelling festive offers in terms on cash back and tie-ups with merchants," Sridharan said.

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According to bankers, overall spends on credit cards (industry level) have moved up 25% year on year during FY 14 as against FY 13. The total credit cards in circulation as on March 2014 stood at 1.91 crore. "With the economy looking up, we expect the spends in cards would grow in future," Rao of HDFC Bank said.

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