Remarkably, online debit card payments are probably going to be much lower than those from last October, which suggests that more consumers are switching to credit cards for online purchases in order to take advantage of deals.
Credit card spending on e-commerce platforms reaches an all-time high in September because of Flipkart’s Big Billion Day and Amazon’s Great Indian Festival.
This month, online credit card spending is expected to hit a record high of Rs 1.2 lakh crore.
When the new lower GST rates went into effect on September 22 and festive shopping began on the two biggest e-commerce sites, online credit card spending also surpassed Rs 10,000 crore in a single day for the first time. Additionally, the 10-day Navaratri celebration began on that day.
Growth from year to year
Compared to Rs 1.06 lakh crore in October 2024, online credit card expenditure has increased to Rs 1.03 lakh crore by September 26. The value is probably going to fall between Rs 1.15 lakh crore and Rs 1.2 lakh crore with four more days of sales left.
It is interesting to note that last October was when both Diwali and Dussehra happened. However, the internet holiday sales began in September, far before Navaratri. Online credit card spending exceeded Rs 1 lakh crore in both September and October of 2024.
It is interesting to note that online debit card payments are probably much lower than those from October of last year, suggesting that more consumers are switching to credit cards for online purchases in order to take advantage of deals.
While online debit card spending reached Rs 14,300 crore in October 2024, it has been relatively low this year, at Rs 11,000 crore, even with a few days left.
The rapid growth of credit cards via co-branded cards from banks and businesses, as well as the emergence of many fintech companies that have released Rupay credit cards that are compatible with UPI, are other factors contributing to the trend toward credit cards.
UPI falls behind
However, since the majority of the deals on e-commerce platforms were based on discounts for card payments, the nation’s most widely used digital payment mechanism, Unified Payments Interface (UPI), slowed at this time.
Interestingly, compared to the days of September 22, the UPI volume and value numbers for the first half of September were at least 25% higher.
For example, September 22 had the second-lowest volume of transactions for the month. On the first 10 days of September, there were around 670 million UPI transactions daily; on the days of the online sale, this number dropped to 640 million. In a similar vein, the daily transaction value often surpasses one lakh crore in the first days, whereas it was about Rs 80,000 crore during the selling days.
Sales events cannot affect UPI since it is too large
During the sales days, credit card spending increased by almost Rs 5,000 crore each day, which is 50% more than it would be on an average day. However, Rs 5,000 crore is around 5% of UPI’s daily worth. Between the highs and lows, the platform’s monthly fluctuation range is around Rs 30,000 crore.
In actuality, UPI equals the average monthly expenditure of Rs 95,000 crore on online credit cards.
UPI is too large a platform to be influenced by both online and physical sales events with that type of size. UPI is comparable to cash.
Card payments are the main source of discounts during the Dusshera sale events. Therefore, UPI may be greater on a typical day for Flipkart or Amazon, but customers prefer cards for the well-chosen card offers during sale event days.