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International credit card use up 63% after Covid-19, overtakes debit cards

Submitted by admin on August 28th, 2024

There was more than one percent increase in Indians’ spending through international credit cards in last two years, though less than PPIs and debit cards. This has often been attributed to an uptake in travels after the lifting of restrictions occasioned by Covid 19 and high reward points offered by the card issuers as pointed in the Economic Times.

This growth has come in spite of the fact that while the government started including international credit card transactions within the purview of liberalised remittance scheme, a higher TCS of 20 % has been imposed on such transactions. Nevertheless, the credit card industry remains a work in progress on how to implement these regulations, the report noted.

Cross-border transition through credit cards also increased by 63 per cent from December 2022 to July 2024 as per RBI data. Use of PPIs surged by 53 per cent while overseas debit card transactions were up by a mere 8 per cent, said the ET report.

Ananth Babu, CSB Bank cards and payment head, said that the banks are pushing credit cards because the interchange earnings on international transactions through DCC and FX markup rates are better. But it adds to 3-5 % of the transaction and such high margins are not there for debit cards. From the customer’s perspective credit cards are used only because of the kind of benefits that comes with it.

Nevertheless, customers prefer credit cards due to the increased international transactions fees per head, and the rewards accompanying them. Axis Bank’s head of cards and payment processing Sanjeev Moghe noted that credit cards can be used anywhere and customers often just need to activate the card for International use, It is like Roaming but in phone networks.

Although transactions through PPIs have increased since December 2022, the industry expects that this growth will slow down due to the limited applications of such instruments.