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Credit card spends seen 8% lower in Q1 from March quarter

Based on increasing UPI to card spend ratio, the brokerage had projected card spend at  ₹55,000 crore in May as against actual spend of  ₹54,700 crore and continues to see sequential growth of 22% in June. Photo: iStockPremium
Based on increasing UPI to card spend ratio, the brokerage had projected card spend at 55,000 crore in May as against actual spend of 54,700 crore and continues to see sequential growth of 22% in June. Photo: iStock

  • Despite sequential decline, credit card spends in May remained higher than monthly spend between April and September 2020. This indicates that the impact of the second wave is significantly less than the first

Mumbai: Total credit card spends in Q1FY22 is estimated to be 8% lower than the preceding three months at an aggregate level, analysts said.

For SBI Card, analysts at ICICI Securities expect the total spend to be 33,300 crore in Q1FY22 as against 35,900 crore in Q4FY21. At the systemic level, the impact of covid second wave on credit card as well as other payments, has been much less than during the first wave, and recovery too has been faster, they said.

Despite sequential decline, credit card spends in May remained higher than monthly spend between April and September 2020. This indicates that the impact of the second wave is significantly less than the first, the report said Tuesday.

“One can expect recovery in June given a 12% month-on-month growth in unified payment interface (UPI) payments in June and an average daily POS/e-commerce spend that was 22% higher than May at 1,600 crore. Credit card segment has also outperformed debit card considering that the ratio of credit card to debit card spend has remained at >1 since January," it said.

Based on increasing UPI to card spend ratio, the brokerage had projected card spend at 55,000 crore in May as against actual spend of 54,700 crore and continues to see sequential growth of 22% in June.

“UPI’s market share has increased from 8.1% in Jan’20 to 11.7% in March and 18.3% in May. The ratio of UPI to credit card spend has continued to gradually increase from 3.24x in January 2020 to 6.97x in March 2021 and 8.96% in May 2021. Within UPI, the value market shares of Google Pay and PhonePe remain at 37% and 47% respectively as at June," the report said.

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