Online credit card transaction volumes are set to go past offline outlets, as more customers move to quick commerce platforms, data from the Reserve Bank of India shows.
The number of credit card transactions through online platforms stood at 24.13 crore in July, against 24.32 crore at offline outlets through point of sale (PoS) devices.
“Over the last couple of years, a large number of grocery, stationery, home essentials and toys sales moved to quick commerce platforms. For several urban customers, the offline and online transaction patterns have completely inverted over the last two years,” a business development manager with a payment gateway company told Moneycontrol on condition of anonymity.
A year ago, the number of offline transactions stood at 20.24 crore and online credit card transactions at 18.77 crore, with 1.5 crore separating the two payment methods.
To be sure, offline card swiping terminals have been expanding steadily, with installed PoS machine count for July at 1.2 crore, compared with 90 lakh units in the year-ago period, a 33 percent growth.
The credit card transaction value has been higher on online platforms for several years. In July, the value at offline outlets stood at Rs 70,000 crore compared to Rs 1.23 lakh crore spent online.
The drop in use of credit cards at offline outlets could also be because some of these transactions have shifted to the popular Unified Payments Interface (UPI) method. As some low-value transactions do not earn rewards, customers have likely started using UPI for such payments.
Tap for change
Banks have been issuing credit cards to new job-salaried individuals, diluting the aspirational value of credit cards.
“The growth of retail banking units within banks meant that there are a lot of lifetime free credit cards, and a lot more people are getting credit cards. The youngsters are ordering more online, and that drives the shift of low-value and high-volume transactions online than weekly supermarket visits of the slightly older demographic,” said Srinath Sridharan, author, policy researcher and corporate adviser.
There are around 11 crore active credit cards in the country, though unique credit card users are estimated to be around 4.5 crore, with many owning multiple cards.
“The tap and pay option for credit cards, whether through a card or mobile phones, has not yet caught up. It offers a similar fast UPI-like experience but nothing else comes close to the UPI experience if you take the UPI Lite where PIN is not necessary,” the executive added.
Around 64 percent of all UPI transactions happen at merchants – online and offline – as scan and pay became popular, while making the process faster and simpler.
According to NPCI data, the largest categories for UPI payments were grocery and supermarkets, and restaurants, together contributing to almost 42 percent of all UPI transactions. NPCI operates UPI.
“Some of these transactions have gone to Swiggy-Zomato apart from quick commerce platforms, and that has been the most defining shift in card payments over the last year,” said a senior executive with a card network technology company.
The quick commerce firms do around 10 crore orders in a month, most of which are paid online, especially through UPI, according to the executive from the payment firm quoted above.
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