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Usage of debit, credit card surges: Transactions up 111% from April low

Transactions using debt and credit cards jumped to Rs 1,05,266 crore in June as against Rs 49,807 crore in April.

Written by George Mathew | Mumbai | August 14, 2020 2:07:18 am
The value of transactions in June came closer to the pre-COVID levels of Rs 1,15,877 crore in March. (File)

After the crash in April due to the COVID-19-induced lockdown, value of transactions through credit and debit cards jumped 111 per cent in June to come closer to the pre-COVID levels in the month March, and cash withdrawals through ATMs rose by Rs 1 lakh crore in two months.

Indicating that consumer spending has picked up, transactions using debt and credit cards jumped to Rs 1,05,266 crore in June as against Rs 49,807 crore in April, latest data available with the RBI said. Card use fell from Rs 1,15,877 crore in March as trade and business were hit in the wake of the lockdown across the country.

As per the data, credit card transactions rose from Rs 20,765 crore in April to Rs 42,773 crore in June, while debit card use jumped from Rs 29,043 crore to Rs 62,494 crore. Total value of card transactions in May was Rs 80,274 crore. Value of prepaid payment instruments also increased to Rs 14,494 crore in June from Rs 9,648 crore in April. What’s interesting is that use of debit and credit cards in POS terminals of merchant establishments spurted to around Rs 45,000 crore in June from around Rs 17,000 crore in April.

“Consumers have started spending money amid layoffs and paycuts. People are now going digital to make payments. The rise in card transactions at POS terminals indicates spending is slowly returning to normalcy. If localised lockdown continues, the situation won’t improve further,” said a banking source.

Significantly, the Reserve Bank of India (RBI) data also indicates that consumers have started withdrawing more cash through ATMs. Cash withdrawals using debit cards went up to Rs 2.30 lakh crore in June from Rs 1.27 lakh crore in April, a rise of over Rs 1,00,000 crore. As of June, there were 5.72 crore credit cards and 84.54 debit cards in India.

However, bankers are keeping their fingers crossed about the sustainability of the rise in card transactions in July and August as the RBI had last week said consumer confidence plummeted to a historic low in July 2020, mirroring the “extremely weak state” of the economy hit by the pandemic.

Localised lockdowns in many states had hit goods movement and trade. The current situation index plunged to an all-time low of 53.8 in July when compared with the index one year ago as against 63.7 this May, according to the RBI’s latest consumer confidence survey. However, the future expectations index improved to 105.4 for July from 97.9 in May, indicating that the situation could improve next year at the same time.

The RBI data shows credit transfers, including NEFT and IMPS, rose to Rs 24.19 lakh crore in June from Rs 20.18 lakh crore in May and Rs 16.87 lakh crore in April.

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