Tag: Debit and credit cards

Credit card business in August slows after robust growth rate in July

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The growth rate of credit card spends has slowed down to 3.8 percent month-on-month in August 2021 against 19.3 percent month-on-month growth seen in July 2021. Spends per card growth rate has slowed down to 2.96 percent month-on-month growth in August 2021 against 18.18 percent month-on-month growth seen in July 2021.

Overall, the number of credit cards has increased by 0.82 percent month-on-month in August against 0.95 percent month-on-month growth seen in July.

The per card spend slowdown has been significant for City Union Bank (-4.88 percent MoM) followed by Canara Bank (-3.43 percent MoM), Union Bank of India (-2.58 percent MoM), Karur Vysya Bank (-1.05 percent MoM), HDFC Bank (-0.99 percent MoM).

Strong momentum continues for Federal Bank for the second consecutive month in terms of per card spend, followed by Dhanlaxmi Bank, Axis Bank, Kotak Mah Bank, IndusInd Bank and AU SFB to name a few.

Surprisingly, the spending growth rate has come down massively. Looks like, people spent after the opening up of the economy and are back to conserving cash. The trend of spends may increase during the festive season or in the October-November period.

The credit card is the most profitable business for any bank or lender. The interest rates are very high over there, at and above 30 percent, which makes it one of the most profitable businesses for any lender.

Credit cards form around 6.54 percent of total cards issued by lenders i.e. debit cards and credit cards.

Also Read | Key Credit Card Mistakes To Avoid During Upcoming Festival Season

Market share movement, MoM

HDFC Bank’s market share loss momentum has continued for 9 months in a row. The biggest beneficiary of HDFC Bank’s loss has been ICICI Bank followed by SBI.

Axis Bank has also lost market share by 2 bps in the last 9 months but has lost market share by 13 bps from April 2021 to Aug 2021.

Market share momentum

August 2021 vs July 2021 is as follows:

• Top market share loss was seen for HDFC Bank, RBL Bank, HSBC, Citi Bank, Standard Chartered Bank, American Express & Yes Bank
• Top market share gain was seen for ICICI Bank, SBI, Bank of Baroda, Union Bank of India, IDFC First Bank & Axis Bank

Read More | Credit Cards In India: Hdfc Bank Leads In Market Share But This Lender Beats It In Per Card Spend

Well, the credit card market leader in India is HDFC Bank, while the highest rise in credit cards issued is by South Indian Bank.

Despite the ban from RBI for HDFC Bank in the last 9 months (of data reported from November 2020 to August 2021), HDFC Bank continues to remain the dominant force in the market with a market share of 23.06 per cent followed by SBI at 19.4 per cent and ICICI Bank at 17.92 per cent. The top 4 players have a huge market share of 71.82 per cent in the Indian credit card market. All others, i.e., 28 lenders/banks, have a market share of less than 5 per cent each.

Average ticket size has not increased massively in August as it did in July, but dominance in the rise in ticket sizes is with Federal bank.

Federal Bank has gained massively on credit card business post the opening of the economy or relaxation of movement in the economy. In July’21, it saw ~78 per cent increase in average ticket size MoM vs industry average of 18.18 per cent rise. In Aug’21, the average ticket size increase was 27.43 per cent MoM vs the industry average of 2.96 per cent rise MoM.

Also Read | RBI Partially Lifts Technology Ban On Hdfc Bank 

The most important point in credit cards is per card spend. You would be surprised as to who leads the per/card spend (credit card) in India. The highest ticket size continued with Karur Vysya Bank, whose average ticket size is now at Rs 26,717.5, which is 2.19x of industry average and 1.91x HDFC Bank’s average.

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RBI’s new rules for debit, credit cards come into effect today. Here’s all you need to know

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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New rules for debit and credit cards, which were issued by the Reserve Bank of India (RBI) in January in a bid to increase security and reduce frauds, came into effect from Monday. Under the new rules, all card issuers (banks and financial institutions) can enable or disable their cards for different types of use.

Here’s all you need to know about the new rules for debit/credit cards:

From Monday onward, the cards will be enabled for contact-based points of usage only at the time of issuing or reissuing cards. Online use or contactless transactions will remain disabled and can further be enabled by the cardholder.

For international transactions, online transactions, card-not-present transactions and contactless transactions, customers will have to separately set up services on cards.

Cardholders can now also modify transaction limits within their overall card limit for all types of transactions. This includes domestic and international transactions, at PoS machines, ATMs, for online transactions and contactless transactions. This facility will be available on a 24×7 basis through the bank’s mobile application, internet banking, ATMs, interactive voice response (IVR) and at a bank’s branch or office.

For existing cards, issuers can take a decision, whether to disable the card, not present (domestic and international) transactions, card-present (international) transactions and contactless transaction rights.

Existing cards — which have never been used for online (card not present)/international/contactless transactions — will be mandatorily disabled from Monday.

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Here’s what RBI’s new rules for debit, credit cards mean for you

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Reserve Bank of India (RBI) recently issued a new set of rules to improve user convenience and increase the security of debit and credit card transactions. The central bank has asked all card issuers (banks and financial institutions) to give card users the facility to enable/disable their cards for different types of use. The new norms have been issued under Section 10(2) of the Payment and Settlement Systems Act, 2007 and will come into effect from March 16, 2020, RBI said in a statement.

(Also read: Types of digital payment frauds and how to avoid them)

Here are the new norms issued by RBI for card users and how they will impact them:

Card enabling/disabling facility

RBI has asked card issuers to give cardholders the facility to switch on and off their debit or credit cards at any given point.

The RBI has asked card issuers to enable cards for contact-based points of usage only at the time of issuing or reissuing cards.  This means that when a card is issued it will, by default, only be usable to physically swipe at a PoS or at an ATM. It would not be enabled for online use or for contactless transactions, which can further be enabled by the cardholder.

For international transactions, online transactions, card-not-present transactions and contactless transactions, customers will have to separately set up services on their cards.

Transaction limits

Cardholders should also be able to modify transaction limits within their overall card limit for all types of transactions, RBI recently stated. That would include domestic and international transactions, at points of sale (PoS), ATMs, for online transactions and contactless transactions.

This facility, RBI has mandated, should be provided on a 24×7 basis through the bank’s mobile application, internet banking, ATMs, Interactive Voice Response (IVR) and at a bank’s branch or office.

For existing cards

For existing cards, issuers can take a decision, based on their risk perception, whether to disable the card, not present (domestic and international) transactions, card-present (international) transactions and contactless transaction rights.

Existing cards which have never been used for online (card not present)/international/contactless transactions shall be mandatorily disabled for this purpose.

Every cardholder should be alerted through SMS or e-mail, as and when there is any change in the status of the card.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow