Credit card buys seen 8% lower in Apr-June quarter, say analysts

spends appear to have recovered in June judging by trends, compared with a 7 per cent month-on-month decline in May because of the second wave of the Covid-19 pandemic.

On a quarterly basis, however, analysts expect spends to be 8 per cent lower in the first quarter of financial year 2021-22 (Q1FY22) than in Q4FY21.

According to a report by ICICI Securities, at the systemic level, the impact of the second wave on and other payments was much lesser than during the first wave, and recovery, too, has been faster. Notwithsta­nding the sequential decline, at Rs 54,700 crore credit card spends in May were still higher than the monthly spends between April and September 2020, indicating that the impact of the second wave was not as severe as in the first wave. In April, credit card spends totalled Rs 59,200 crore, higher than the monthly spends witnessed between April and September of 2020. Analysts expect June to be better than May in terms of credit card spends, given the fact that Unified Payments Interface (UPI) witnessed a 12 per cent month-on-month growth in June, after a slump in May, and average daily PoS/e-co­mmerce spends were 22 per cent higher at Rs 1,600 crore, compared with Rs 1,300 crore in May. “We continue to see sequential growth of 22 per cent in June 2021, based on trends seen in average PoS and e-co­m­merce spends,” said ICICI Securities.

Credit card buys seen 8% lower in Apr-June quarter, say analysts

Among players in the credit card segment, HDFC Bank, despite a ban on issuing new credit cards, retained a sizeable, and, perhaps, the lar­gest market share in spends, at 27 per cent in May. SBI Cards has grabbed a market share of 18 per cent. Almost all modes of payments witnessed a drop in May because of the second wa­ve, as induced strict localised lockdowns were imp­osed in almost all parts of the country. But, as the number of infections started declining and the economy started opening up, digital payments also picked up from the slump and posted significant sequential growth.

In May, UPI processed 2.53 billion transactions, down 4.16 per cent and 7.32 per cent from April and March, respectively. In value terms, UPI saw transactions were worth Rs 4.9 trillion, down 0.66 per cent and 3 per cent compared with April and March, respectively. But UPI touched a record high both in terms of volume and value of transactions in June. The platform recorded 2.8 billion transactions worth Rs 5.47 trillion in June, up 10.6 per cent in volume terms and 11.56 per cent in value terms over May. Bharat Bill Payment Systems also saw a 16 per cent month-on-month rise in the volume of transactions in June to 45.47 million, amounting to Rs 7,934.71 crore. Imm­ediate Payment Ser­vice saw an 8.55 per cent rise in volume of transactions in June over May to 303.76 million am­o­unting to Rs 2.84 trillion.

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