UPI beats debit, credit cards in India
Demand for this specialty has grown significantly as a result of recent corporate scandals. Its balance is also increasing every year. But there has been a decline in annual transactions per card. Can credit cards cease to exist in the wake of UPI?
MONEY9: Ram Joshi, who works in a pharma company, spends a whole month on credit cards. This allows the bill to be paid on time every month. For people like Ram, credit cards have become a very popular option. According to RBI data, the growth in the number of credit card users in March 2022 has surpassed the pre-Corolla level.
The report shows that 19 lakh new cards were issued in the country in March 2022, the highest in 23 months. At the same time, the total number of credit cards has reached 7.36 crore. In it on an annual basis 18.7 Percentage has increased. Credit card spending has been on record for over one lakh. But amidst all these statistics a new trend is emerging.
Demand for this specialty has grown significantly as a result of recent corporate scandals. According to the brokerage report, the average annual transaction per card in the year 2017-18 is 3.5 Which was the year Decreased to 2.8 in 2021-22 Left. Simply put, there are only less than three transactions per year through a single credit card.
Why are credit card transactions declining, is credit card expiring? What is the reason after all?
Surprisingly, the credit card industry’s outstanding 9.75 in the year 2021-22 compared to the year 2017-18. Lakh crore. In it on an annual basis 16 Percent. Year The remaining 4.62 in 2017-18 Lakh crore.
Expert opinion
Tax and investment expert Balwant Jain says millions of people lost their jobs during the Koro epidemic. The incomes of a large number of people have declined. This has reduced people’s ability to spend. Credit card loans are the most expensive in the world. Once a payment is made, the consumer is badly trapped in the loan trap. Then it becomes difficult to get out of it.
Credit card loans are likely to become more expensive as the RBI raises key interest rates.
Because of this people are moving away from using credit cards. Are trading in cash instead of increasing the loan burden. The UPI option for this is proving to be instinctive and accessible. In transactions by UPI in the country due to being a simple process Unexpected There has been a boom.
Annual transaction by UPI 84 Reached Rs 1 lakh crore Year in terms of value in total digital transactions in the country Increasing the share of UPI in 2021-22 81 Percent. While credit cards account for 9%. Percent is left. One big reason is that in the Corona era, people have been pushing for credit card bills. This has led to a steady increase in payment arrears despite a decline in transactions.
Another reason is that Having more than one credit card has now become a status symbol for young people. One person will get more than half a dozen cards. But he only uses one or two of them. In addition to this one pays from one credit card to another. This is also increasing the demand for credit cards in the market and increasing the debts. When transactions are getting limited. In the current situation, the transaction craze by UPI is increasing. This is not to say that credit cards will cease to exist. After the merger with UPI, the luster of credit cards will increase again.
Overall, the credit card option is still attractive for meeting financial needs. If you pay on time, you can meet your financial needs for an entire month without interest. You must have money in your account for transactions from UPI. The RBI is also in the process of linking credit cards to UPI. This will make the credit card option more useful.