In India credit card user percentage increase by 50% in FY08

According to the reports from the banks and credit card issuers in India such as Citibank, American Express and Standard Chartered, have recorded a sharp jump of 50% in card usage in FY08.

Although in India on an average consumers spend Rs 4,000 per month per card, which is considerably less in comparison to other Asian nations like China, Japan and Thailand. In India the disposable income has gone up with this the use of plastic money is gaining prominence and has started picking up the pace after holding on to steady growth for years.

Three to four years ago, in India consumers used to spend around Rs 1,500 a month on their cards. Credit Card Management Consultancy (CCMC) director Vijay Mehta, said, “With disposable income going up in India and organized retail gaining prominence, consumers are increasingly getting used to credit cards”.

It is not only the organized retail sector responsible for the increase in the usage of plastic money but the co-branded cards and the benefits they offer are also responsible for more usage of credit card. Consumers in India are slowly shifting to co-branded cards, because of the benefits offered by the cards in the form of reward schemes and discounts given by both the credit card companies and tie-up firms.

For instance, American Express has tie-ups with Kingfisher Airlines and Airtel, Citibank has teamed up with MTV and Jet Airways and market leader ICICI has co-branded cards with HPCL and India times.

American Express vice-president-marketing Amit Dutta said, “Co-branded cards are doing extremely well and are instrumental in fuelling proportionate growth in the industry. We have witnessed a significant growth of 50% in the credit card section.”

With change in lifestyle, there has been change in the outlook of the consumers. Slowly the consumers are shifting to using credit cards for purchasing products and services against the traditional forms of payment such as cash or cheque. Increase in the usage of internet has also helped credit card industry.

“Since a host of services like airline or railways tickets, hotel bookings and movie shows can now be booked through the Internet by using credit cards, average spends per card have gone up,” said a Citibank official.

According to CCMC, figures at present there are about 25 million credit card holders in the country and it is expected the number will increase significantly in 2008-09. Around 40% of the cards are still inactive as a large number of consumers have multiple cards, but most of them use only one or two actively.