E-commerce pushing sales and transactions of credit cards: Vijay Jasuja

We have not seen any rise in delinquencies and it has either remained flat or marginally come down. In fact, even in banking, the retail segment is not under stress and pressures are there in the mid and large corporate segments. Over the last two to three years we have not seen adequate economic growth and that has impacted profits and cash flows of companies which in turn has impacted banks.

While in our business the delinquencies are at the same level, there is a difference between banks and cards. In case of banks they don’t write-off immediately as the asset moves from standard to sub-standard to doubtful and then to loss. In the card industry, after 180 days everything is written-off and does not figure in the calculation of NPAs.

RBI data shows that the card spends are growing at around 25 per cent. Where is the growth coming from?

E-commerce has played a big role. In fact, for us, two years ago online spends accounted for less than one-fourth of our total spend and it has now grown to almost half of the total spend. This happened in a period when the spends grew by 28 per cent. Online shopping is gaining momentum and is contributing to the overall growth of spends. E-commerce is also providing avenues for people to buy premium international brands in tier-2 and tier-3 cities, which in turn boosts spending. We expect growth in spends to remain strong over the next five years.

Are you reaching out to customers in smaller towns as e-commerce is growing?

Yes, we are reaching out. Two years back we were issuing cards in 50 locations across the country but now we are doing it in over 90 locations. We are not going deeper because we need to have in place a team for collection etc. So we are gradually opening in tier 2 and 3 cities and in further smaller towns we are giving secured cards against fixed deposit.

Wallets have emerged as a strong payment option. Are they eating into your business?

Non-cash transaction and use of plastic money is growing and is bound to grow. Wallet is the new entrant and it is growing fast. The number of customers with wallets is more than credit cards but the volumes are less. However, since the overall business has grown very fast over the last two years, it has not hurt our growth. But yes, had they not been there, we would have grown more.

Going forward, do you see them further eating into the total pie?

I don’t think so. Even Visa and Marstercard are developing Visa Checkout and MasterPass which will be universally acceptable wallets and one would not be required to carry the plastic. While wallets can’t be funded beyond Rs 10,000 at a time they also do not have the second level authentication check, credit cards provide credit limit and are more secure. Also with rising instances of frauds on wallets, there is a possibility that RBI may introduce a similar security feature as required for debit and credit cards and in that case wallets will have no other advantage.

Visa checkout will be rolled out in the next 2-3 months and MasterPass is also expected to come later this year. It is important to note that with the chip plus pin security feature, the incidents of fraud on credit cards have come down significantly.

Any special feature that card users may expect from issuers?

We are looking at introducing self limit management where one can set a sub-limit from the total available credit limit made available by the issuer. Suppose you are travelling to Singapore and you have credit limit of Rs 5 lakh on your card but if you want to reduce the limit to reduce your risk, you can simply visit the website or our mobile app and reduce your limit to Rs 1 lakh or Rs 2 lakh. Through this feature individuals can dynamically manage domestic and international limit within the total available credit limit. We will be able to provide it over the next 6 months.

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