Indian consumers shift to debit cards amid Covid-19 lockdown: Report

In the first quarter of the current fiscal, when the coronavirus-induced lockdown was in place, Indian consumers largely shifted from credit cards to debit cards.

According to a report of Times of India, data released by the Reserve Bank of India (RBI) shows that credit cards spending in June 2020 were Rs 42,818 as compared to Rs 67,000 in January 2020. There was a significant drop of 36 per cent.

On the other hand, debit cards spending also saw a drop of 24 per cent from Rs 62,153 crore in January to Rs 47,252 crore in June.

"In metros, credit card spending has taken a hit as malls and travel was completely shut during the lockdown. While conventional spending in big retail was impacted, we have seen an excellent pickup in digital spending in smaller retail outlets in metros and in small cities. In all these small-ticket transactions, it is largely the debit cards that were used," Pine Labs CEO told the news agency.

The coronavirus-induced lockdown gave a push to digital payments. Although spending on both debit and credit cards decreased as Indians held back on discretionary purchases, debits cards were used 48.8 crore times more in January and 30.2 crore times in June, according to the report.

Meanwhile, credit cards were used for transactions 20.3 crore times in January as compared to 12.5 crore times in June.

The average spending per debit card fell by Rs 203 — from Rs 761 in January to Rs 558 in June. During the same period, spending per credit card decreased by Rs 4,526 — from 12,000 to 7,474.

"While there has been a drop in discretionary spending compared to the pre-Covid-19 period, we are actually seeing a growth in EMI or card payment, which is used for the purchase of electronics, when we compare numbers with the year-ago period," Rau added.

SBI cards CEO Ashwini Kumar Tewari recently pointed out that credit card spending has improved since the 'unlock' and is back to 80 per cent of pre-Covid-19 levels.

"As we went towards the end of June, into July as more and more lockdown was lifted and people could go out selectively, this started shifting towards utilities which means people were paying their electricity bills, insurance payments, some people were even paying school fees, lot of online course fees were also paid through cards.

“And this continues, even today this would be a significant portion out of the total online payments," Tewari said.

(With agency inputs)