The convenience of ordering your favourite book, bag, garment, and electronic gadget from the comfort of your home (or even office!) on e-retail platforms such as Flipkart, Snapdeal and Myntra seem to be driving up credit card spends, going by Reserve Bank of India data.
Festival offers (discounts) coupled with easy payment options thrown in are being used by the e-retailers to lure buyers to shop online.
As per central bank data, banks’ credit card outstanding, year-to-date (up to November 28), has risen 18 per cent as against a decline of 3 per cent in the corresponding year ago period.
In the year-to-date period, outstanding loans against credit cards were up by Rs 4,600 crore as against a decline of Rs 800 crore in the year ago period.
State Bank of India, in its research report, observed that the recent marginal pick up in bank credit growth is being driven to some extent by pick up in personal loans, primarily credit card out-standing.
“We believe that such increase may be attributed to the emergence of e-retail platforms, and it remains to be seen whether this augurs well for the revival in consumer sentiment,” said the report.
E-commerce players are busy wooing shoppers with easy payment options and equal monthly instalments on electronic gadgets, consumer durables and mobile phones. Instalments are also being offered on items below Rs 15,000.
According to m-commerce company Paytm, about 30-40 per cent of electronic goods are bought through EMIs facilitated by credit cards.
In the recent concluded online shopping festival by Google around 20 million consumers shopped online and projected to be 100 million online shoppers by 2016 as per the estimates.
Credit card usage in ecommerce transactions is around 20 to 30 percentage as per some industry estimates and increased by 20 to 25 in the last 2 years
The number of credit cards in circulation saw an increase of about 14 lakh year-on-year to 1.99 crore as at October-end 2014.
Out of the 46.15 crore cards in circulation in the country, credit cards constitute just 4.31 per cent of the total, with the balance being accounted for by debit cards, as per recent RBI data.
E-retailers feel that if credit card penetration increases in the country with proper checks and balances then it will help the consumers as they can avail of the credit facility. The e-retailing industry as a whole will also get a fillip.
India is one of the largest and fastest growing economies in the world supported by increasing disposable income and thereby consumers are looking for better standard of life day by day. Ecommerce plays a crucial role in fulfilling the needs of the customer which the brick-and-mortar retailers were not able to cater.