Retail spending and activity levels in India have now recovered to around 90% of pre- COVID-19 levels after dropping to around 55-65% of their average back in April 2020. The pace of the adoption of digital services across major channels has accelerated due to the pandemic – which has led to changes on consumer behavior (e.g., more people are shopping online or making contactless payments).
An ICICI Securities report reveals that physical payment methods are not being used as often as they were before the pandemic began. Many consumers in India now prefer to make digital payments, the report noted.
Contactless payments or UPI based transactions now account for nearly a quarter or 25% of overall financial transactions in India. UPI transaction value has nearly doubled year-over-year and it’s up over 35% when compared to pre-COVID. Monetary transactions performed via mobile devices are also up more than 20% since the Coronavirus outbreak, the report stated.
Credit card spending in India has not yet fully recovered. It’s currently at around 70% of pre-COVID levels, while debit card spends are at around 80% of pre pandemic levels. However, the number of transactions involving online spending have increased by around 10%.
The pace of new payment card issuances (which are measured in terms of YoY growth in number of cards issued) has dropped to around 15% of the pre-COVID period.
As first reported by CNBCTV18, banks appear to have become more risk-averse when it comes to introducing or offering new credit cards. They’ve also placed new limits to control the amount of borrowed funds consumers can access. Meanwhile, debit card usage has increased when compared to credit card use in India, following the COVID-19 outbreak.
Financial and retail industry participants in India have claimed that department stores, utility, education, health, fuel, and other everyday spending has returned to around 85-90% of pre-Covid levels.