Credit cards propel card circulation to 1.384 billion, up 6% YoY

Transaction trends: The total number of cards in circulation surged to 1.384 billion as of December, marking a 6 per cent year-on-year (YoY) increase. This growth trajectory was predominantly steered by an uptick in credit card issuance, soaring by 21 per cent compared to a modest 2 per cent rise in debit cards and a solid 13 per cent growth in prepaid cards.

The credit card issuance dominion was largely commanded by private sector behemoths, including HDFC, SBI, ICICI, Axis, and Kotak. Conversely, public sector giants spearheaded debit card issuance, with stalwarts like SBI, Bank of Baroda, Canara Bank, Union Bank of India, and HDFC leading the charge.

Risk strategies differ

The divergent strategies between private and public sector banks highlights contrasting risk appetites and strategic visions. While private players exhibit a penchant for higher-risk ventures, public banks prioritise broader financial inclusion initiatives.

Despite the surge in card issuance, transaction volumes portray a nuanced picture. In the latter half of 2023, overall card transactions witnessed a marginal decline of 7 per cent from the previous year. Notably, debit card transactions registered a substantial downturn of 34 per cent, whereas prepaid card transactions experienced a more subdued 2 per cent dip. In stark contrast, credit card transactions witnessed a robust surge of 21 per cent.

However, the value of card transactions painted a different narrative, showcasing a 13 per cent uptick from the preceding year, primarily buoyed by credit card transactions, which recorded a robust 11 per cent growth. Conversely, debit card transactions witnessed a16 per cent decline.

PoS vs online transactions

Total card transactions at PoS terminals witnessed an 8 per cent YoY upswing, propelled by a notable surge in credit card transactions. However, debit card transactions at PoS terminals witnessed a notable decline, likely influenced by the burgeoning popularity of UPI transactions.

Conversely, prepaid card transactions at PoS terminals showcased an 800 per cent YoY surge, albeit with ambiguous causal factors. Meanwhile, the value of card transactions on PoS terminals remained relatively steady, with credit card transactions demonstrating a healthy 16 per cent growth, while debit card transactions plummeted by 18 per cent.

Debit card, UPI dynamics

While the total volume witnessed a 23 per cent dip, credit card transactions surged by 29 per cent, indicating shifting consumer preferences. However, debit card transactions suffered a substantial 44 per cent decline, likely indicative of UPI's growing dominance in online payments.

As credit cards continue their upward trajectory, driven by heightened consumption and preference for higher-value transactions, the debit card segment faces headwinds from alternative payment modes like UPI.