India’s credit card base to touch 19m by March end

19% growth in transactions since the decline in FY10, says survey

Despite a sluggish economy, the number of credit cards continues to grow this year and is expected to reach 19 million by March, according to a survey by Atos Worldline. Although this number would still be far from the peak of 2008 (25 million), both private and public sector banks are growing their credit card business cautiously through their existing bank customers. Since the decline in FY10, credit card transactions have grown at a CAGR of 19 per cent.

Credit card spends have grown by 32 per cent as on December 2012 to Rs 11,256.10 crore, compared with Rs 8,532.6 crore up to December 2011, which is significantly higher than the average growth rate of 23 per cent in credit card spends over the five year period from FY09-13. Since FY09, credit card spends have now grown at CAGR of 17 per cent (28 per cent in the period FY11-13), pointed the Atos Worldline survey.

However, despite large growth in transactions, the average ticket size per transaction for credit cards has grown at a CAGR of just 6 per cent (average ticket size for FY13 is around Rs 3,100).

The per card activity in credit cards has increased substantially to over 21 transactions per card per year, a CAGR of 18 per cent over the figure of 11 in FY09.

The number of outstanding credit cards as on December 2012 stood at 18.8 million, compared with 17.6 million as on December 2011, registering a growth of 6.75 per cent, data from RBI showed.

“We have seen a continuous increase in credit card spends over the past one year primarily driven by new and existing cardholders spending more, indicating a positive shift in spending habits of customers,” said Pallav Mohapatra, CEO, SBI Cards.

Private sector banks remain the largest issuers, accounting for more than half of the credit card base. Foreign banks have been slower than domestic banks in issuing credit cards, which has led to a slight erosion in their market share over the previous year (28 per cent in FY12), said the survey. HDFC Bank continues to be the largest credit cards issuer with 33 per cent market share, followed by ICICI Bank with 15 per cent and SBI Cards and Citibank with 13 per cent each.

Share of spends on POS terminals across different categories remained largely unchanged. Retail fashion (which comprises of apparel, jewellery) continues to have the largest share, hotels and restaurants together account for 17 per cent of the total spends on POS terminals, while departmental stores, supermarkets and hotels are the other significant categories.

The number of outstanding debit cards is expected to touch 327 million by March, said the survey. As on December 2012, the number of outstanding debit cards stood at 314 million.

“The strong growth in debit cards issuance continues with a 17 per cent increase in FY13 estimated over FY12. The CAGR over the past five years is now at 24 per cent. Though this growth rate will drop off due to an increasingly large base, banks have been adding between 40-50 million cards each year and this trend is likely to continue given large un-banked population,” said the Atos Worldline survey.

The survey pointed out that the debit card transactions have grown at a CAGR of 38 per cent in the five year period from FY09-13. Debit cards account for over 94 per cent of the total cards issued in India. This vast latent potential in debit cards makes it the most important segment going forward said the survey.

Unlike their limited presence in credit cards, the public sector banks continue to have the dominant share in debit card issuance. The shares for all sectors remain unchanged from FY12.

“The increase in base, favourable regulatory moves and a growing consumer acceptance to use debit cards for direct purchases point towards a continued growth.

Debit card transactions in FY13 are estimated to account for 54 per cent of the overall transactions, up from 33 per cent in FY09,” said the survey.

Per card activity in debit cards has increased at a slower pace than credit cards at 11 per cent since 2009, indicating that most of the growth in transactions and spends is fuelled by the increase in card base.

The average ticket size per transaction for debit cards is around Rs 1600 indicating that spends have grown in proportion with transactions and card base.


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