India's shift to digital payment has undergone a massive transformation in the past few years and the shift to digital payment has set a positive trend for the credit card market, a recent report suggests. As per the India Credit Card Report by Bankbazaar, the country is expected to cross the 10 crore credit cards mark by the end of this year.

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However, the credit card market is dominated by only a few players as 71 per cent of credit cards in India are issued by 4 banks. The report also indicates that the average spends have hit new highs.

HDFC Bank emerges as leader in Credit Cards segment

As of April 2023, there were 8.6 crore credit cards in circulation, up by 15 per cent compared to the 7.5 crore in the year-ago period. Despite this growth the market is dominated by only four banks— HDFC Bank, ICICI bank, Axis Bank and State Bank of India. These four lenders issue 71 per cent of the total cards issued in the country.

HDFC leads the list with over 1.78 crore outstanding cards and average transaction of Rs 5961 per card, followed by SBI which has over 1.68 crore cards with average transaction of Rs 5275.  ICICI Bank grabs the third spot with 1.45 crore cards and average transactions worth Rs 4545.  Axis Bank has 1.22 crore outstanding cards and Rs 3643 average transaction per card.

Increase in average monthly credit card spend

The average monthly spend per credit card has also grown by 9.37 per cent in April 2023 compared to the same period last year. On an average, a customer spent Rs 5,120 per transaction in April 2023 while monthly spending stood at Rs 15,388 per card.

When it comes to credit card spending, Citi Bank and Karur Vysya Bank dominated the segment. The average transaction for Citi Bank card stood at Rs 10,798, more than double of the industry average. On the other hand, Karur Vysya Bank saw the highest monthly spending with Average monthly spend per card at Rs 29,141. The credit cards issued by South Indian Bank, CSB Bank and Federal Bank are the most frequently used cards on average with around 4 spends per month per card.

CitiBank, American Express and IndusInd cards accounted for the highest online spends, with over 70% of all their transactions being online. Average online transaction per card stood at Rs 6,851.

Spike In Credit Card Debt

Credit has emerged as a preferred payment mode for big-ticket purchases, encouraged by reward points, cashback and no-cost EMIs. The average monthly spend per card in April 2023 was Rs 15,388, up from Rs 14, 070 from the corresponding period last year. The outstanding debt on credit cards also grew by 30 per cent from Rs 1.54 lakh crore to Rs 2 lakh crore this year.

UPI payments eat into Debit Card transactions

While credit and debit cards remain the preferred choice for mid-sized spending like travel, electronics, dining, or shopping, people preferred UPI for small day-to-day transactions. According to the report, in April 2023, UPI moved over Rs 14 lakh crore over 886 crore transactions. The average amount per transaction stood at approximately Rs 1,600. In April 2022, total UPI transfers amounted to Rs 9.8 lakh crore over 558 crore transactions.

The rise in preference for UPI has hit debit card use. While 4.6 crore debit cards were added to the market last year, the transaction recorded a dip.