Demand for debit and credit cards bounced back in May after initial dip in April, HDFC Bank’s Parag Rao says

The demand for HDFC Bank credit cards and debit cards bounced back in May after seeing an initial dip in the acquisition numbers on the merchant side in April because of the lockdown, says Parag Rao, Group Head, Payments Business, Group Finance and Digital Banking at HDFC Bank.

India’s largest private sector bank witnessed a surge in both its physical and online sourcing of cards, he said adding that the bank was seeing “a huge number of hits on its website”. The demand from the merchant community has been picking up, he added.

The bank has been working hard to bring the business back on track and with 2-3 big events lined up in the next two months, HDFC Bank is planning to hit the markets in a new “avataar”, Rao said. The bank intends to become the largest digital acquirer in this space.

Rao also said that the bank was working feverishly on multiple other products including the retail asset products.

Rao was upbeat about the digital payment business, calling digital a buzz word.

He said that the lockdown period has seen the emergence of three patterns – one was the emergence of low ticket daily need expenditures coming back significantly on the cards. “We are seeing the resurgence of high frequency low ticket spend for day-to-day needs,” he said adding that in the pre-Covid period a significant chunk of this expenditure would go via cash or wallets.

Another trend, that is emerging is the work from home and things needed to support that ecosystem of work from home, he said. The demand for consumer items have gone up significantly, Rao said. In March the bank’s consumer finance funding was worth Rs 1000 cr while in April it dropped to 80-85 per cent, only to rebound in May, he added.

The third trend was the slump in traditionally high ticket size expenditures because of the nationwide lockdown. In areas like ticket booking, travel, hotel bookings etc, expenditure have practically disappeared, he said.

Though he doesn’t expect a sudden jump in big ticket spending as the lockdown restrictions have eased, the situation will likely improve, going forward, he said.

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HDFC is a market leader in the credit card business, Rao said adding that every third rupee spent through cards in India happens on the bank's cards. In electronic card volume terms, almost 50 per cent of the cards swiped online and offline go through the HDFC Bank network, he added.