High-end users drive credit card business
The credit card market in India is seeing a consolidation of sorts with the irresponsible users of the cards at the lower end of the market being eased out and a growth being seen in the high-end segment.
The total outstanding credit cards in the Indian market, fell for the second consecutive year to 1.80 crore in 2010-11, after 1.83 crore cards recorded in 2009-10 and 2.46 crore in 2008-09.
But the total transaction amount through credit cards hit an all time high of Rs 75,515 crore in 2010-11, a 22 per cent growth over 2009-10. The number of credit card transactions also hit a high of 26.51 crore, up 13 per cent over the previous financial year.
This, the industry members say, is an indication that not only the value of credit card transactions is going up, but also the high end of the market is contributing significantly to the growth.
Indian Overseas Bank, which already has a visa branded credit card, is betting big on its co-branded cards launched in association with American Express Cards, targeted at high-end customers. The bank hopes to sell 50,000 Amex co-branded cards in six months and plans to take it up to 5 lakh cards in two to three years, compared to the 40,000 customers it has garnered so far for its visa-branded card targeted at the average customer.
“We have been seeing good growth in the high end credit card segment over the past few years,” said Shailesh Baidwan, country manager and head of consumer cards, American Express Banking Corp.
“On the flip side, balances outstanding on cards are declining in spite of higher spending on cards,” according to a HSBC official.
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