Credit Card Industry Faces Decline in New Issuances but Shows Signs of Recovery

The credit card industry in India experienced a significant slowdown in October 2024, with a 45% decline in new card issuances compared to the same month last year. The number of new credit cards issued fell to 7.8 lakh in October, a decrease from 16 lakh cards issued in the same month last year.

New Credit Cards Issued Decline Sharply

According to a report by Anand Rathi, the number of new credit cards issued in October 2024 was 7.8 lakh, slightly higher than the 7.6 lakh cards added in May 2024. However, this number is a sharp 45% decline from the 16 lakh new cards issued in October 2023. The report notes that the industry saw a 33% drop in new card additions compared to the previous month of September 2024, signaling a slow recovery in the market.

Recovery in Card Additions and Overall Growth

Despite the drop in new card issuances, the report highlighted a steady recovery in the credit card market. There was an increase in the number of active cards in force (CIF), showing a 16% growth quarter-on-quarter (q/q) in October 2024. This suggests that while new credit card issuances have slowed, the overall growth of active credit cards has improved since June 2024.

Increase in Spending Through Credit Cards

In terms of spending, the industry showed signs of growth. The total spending through credit cards in October 2024 reached Rs. 1.78 trillion, marking a 13% increase compared to October 2023. Moreover, transaction volumes surged by 35.4% year-on-year (y/y), reaching Rs. 433 trillion. This indicates that while the number of new cards issued has decreased, consumers are still using their credit cards actively.

Shifts in Spending Patterns: PoS vs. E-commerce

The report also revealed a shift in the way consumers are spending. E-commerce’s share of total credit card spending fell to 61% in October 2024, down from 65% in September 2024. On the other hand, point-of-sale (PoS) transactions grew, accounting for 39% of total credit card spending in October, up from 35% in the previous month. This shift indicates that more consumers are returning to physical stores, even as online shopping continues to be popular.

PoS Transactions Now Leading in Volume

PoS transactions are now leading in terms of transaction volumes, accounting for approximately 51% of all credit card transactions, while e-commerce transactions make up about 49%. This trend suggests a steady shift back to traditional retail spending as the economy stabilizes.

Outlook for the Credit Card Industry

Though the credit card industry is seeing slower growth than last year, there are positive signs of recovery. The rise in active credit cards and steady spending habits indicate that the market is gradually improving. As consumer preferences shift, the industry is expected to adapt, showing cautious optimism for the future.

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Summary

In October 2024, the Indian credit card industry saw a sharp 45% decline in new credit card issuances, with only 7.8 lakh cards issued compared to 16 lakh in October 2023. Despite this, the market showed signs of recovery, with a 16% quarter-on-quarter increase in active credit cards. Spending through credit cards reached Rs. 1.78 trillion, reflecting a 13% growth year-on-year, and transaction volumes surged by 35.4%. A shift in consumer spending habits was noted, with point-of-sale (PoS) transactions gaining ground over e-commerce. While the industry's growth has slowed, the increase in active cards and stable spending trends suggest gradual recovery and a positive outlook.