Credit card spending in India dipped 5.9% year-on-year to Rs 2.04 lakh crore in September, marking the first decline since February 2021. The drop was largely driven by a delay in festive shopping to October and a shift toward smaller, high-frequency transactions. Despite the contraction, total cards outstanding grew by 10.4%, with private banks gaining market share.
For the first time since February 2021, credit card spending in India recorded a year-on-year decline. According to data from the Reserve Bank of India, total spending dropped 5.9% to Rs 2.04 lakh crore in September. While this decline might appear concerning, it is primarily linked to a change in the festive shopping calendar. Last year, promotional sales and festive shopping were concentrated in September, creating a high base effect that this year’s data did not match. With major festive sale events shifting into October, the demand from September moved to the following month.
Evolving Transaction Patterns
A notable shift is occurring in how consumers use their cards. While the number of transactions surged by 23.2% to 61 crore, the average ticket size per transaction fell by 23.6% to Rs 3,343. This trend suggests that consumers are increasingly using credit cards for smaller, daily purchases rather than large-ticket items. This change is partly attributed to the growing integration of credit cards with the Unified Payments Interface (UPI). For banks, this move toward higher-frequency, lower-value transactions is an important trend to monitor, as it changes the nature of card usage and potentially impacts fee structures. Specifically, online credit card spending saw a sharp decline of 12.5% to Rs 1.26 lakh crore, contrasting with a 7.2% growth in point-of-sale transactions.
Market Share and Banking Performance
Competitive dynamics among issuers also shifted during the month. Private sector banks managed to increase their collective market share to 73.78%, a gain of 44 basis points. HDFC Bank stood out among its peers, increasing its total spending share by 165 basis points to 31.94%. In contrast, other major players, including ICICI Bank, Axis Bank, and SBI Cards, saw their respective slices of the market shrink. Public sector banks, which hold a smaller portion of the market, saw their share dip by 34 basis points, though they continue to focus on tier-two and tier-three cities through RuPay-linked products.
Investors should keep an eye on the October and November data to determine if the spending levels recover as expected. Industry analysts at CareEdge Ratings project that spending could rebound to the Rs 2.28–2.38 lakh crore range during the peak festive season. The key monitorable remains whether the trend of smaller, more frequent transactions will continue to define the market, as this could influence long-term profitability and revenue models for credit card issuers.