Credit card usage for online spending has seen a remarkable rise, driven by enticing discounts and offers from e-commerce platforms. In September 2024, credit card users spent an impressive ₹1,15,168 crore online, representing 65.4% of the total ₹1,76,201-crore credit card expenditures for the month. This marks a significant increase compared to April 2024, when online spending stood at ₹94,516 crore, accounting for 60% of the ₹1,56,498-crore total credit card spends. These figures underscore a clear shift in consumer preferences, with online transactions increasingly overtaking traditional in-store purchases as the preferred mode of spending.
Over the past few months, the trend of online credit card usage has demonstrated steady growth, reflecting changing consumer behavior. By July 2024, online spending accounted for 63.4% of total credit card transactions, dipping slightly to 62.4% in August before rising again to 65.3% in September. This upward trajectory is largely attributed to the festive season sales that began in September, offering consumers a plethora of deals and discounts on e-commerce platforms. For every rupee spent at a physical point-of-sale machine in September, two rupees were spent online, a testament to the growing dominance of e-commerce.
While the value of online transactions has surpassed in-store payments, the volume of transactions online still lags slightly behind physical transactions. In September, in-store transactions numbered 19.8 crore, marginally higher than the 19.4 crore online payments recorded. However, the gap is narrowing steadily. In April 2024, offline transactions stood at 18.4 crore, compared to 15.9 crore online, indicating a substantial increase in online transaction volumes. This shift aligns closely with the rise in e-commerce activity, particularly during festive sales, which have become a key driver of consumer spending.
E-commerce sales during September and October 2024 reached an estimated $12 billion, marking a 23% increase compared to the same period last year. Major platforms such as Flipkart and Amazon played a pivotal role, witnessing a 26% surge in online sales, driven by the popularity of categories like mobile phones and electronics. The quick-commerce segment also contributed significantly, with online credit card spending in this space growing by an impressive 74% year-on-year, according to Datum Intelligence. This growth highlights a shift in consumer habits, with quick-commerce platforms increasingly competing with traditional kirana stores for daily needs.
Utility payments have emerged as another major factor in the growing trend of online credit card usage. In Q2 FY25, there were 62.7 crore online bill payments totaling ₹2,38,897 crore, compared to 45.6 crore transactions worth ₹1,23,345 crore in Q1. While these figures include payments made through UPI and debit cards, they underscore a broader trend of consumers turning to digital platforms for their financial needs. The National Payments Corporation of India (NPCI) Bharat Bill Payment system has been instrumental in this shift, providing a seamless and efficient method for handling utility and bill payments.
A recent survey by Paisabazaar sheds further light on the changing shopping habits of credit card users, particularly during the festive season. Conducted among 700 respondents, the survey revealed a strong preference for online shopping, driven by the convenience and value offered through card-specific promotions. Of those surveyed, 45% were from tier-1 metropolitan cities, 68% were salaried employees, and 76% were under the age of 35. These demographics highlight the significant role of young, urban consumers in driving the shift toward online spending.
The survey found that a majority of respondents recognized the value of online shopping during the festive season, with 80% indicating that they found better deals online compared to offline stores. Nearly half (48%) reported shopping exclusively online, while another 45% combined online and in-store shopping to maximize their savings and convenience. Only a small portion, 7%, preferred traditional in-store shopping, signaling the increasing dominance of digital platforms in consumer spending behavior.
Credit card-specific offers emerged as a major incentive for online transactions, with approximately 80% of respondents utilizing these offers during their shopping. Moreover, 85% of those surveyed admitted to planning their purchases around major sales events on e-commerce platforms. Key motivators included attractive discounts, no-cost EMI options, and exclusive deals that were unavailable in physical stores. These incentives not only enhanced the shopping experience but also solidified the position of credit cards as a preferred payment method for high-value purchases.
The rise in online credit card usage reflects broader changes in consumer behavior and market dynamics. The integration of technology into financial services has made digital payments more accessible, secure, and rewarding. With the convenience of one-click payments and the added benefits of cashback, reward points, and special discounts, credit cards have become indispensable for online shoppers. These advantages, coupled with the expansive reach of e-commerce platforms, have redefined the retail landscape, placing digital transactions at the forefront of consumer preferences.
E-commerce platforms have consistently introduced innovative campaigns to attract and retain customers, further accelerating the shift toward online spending. Seasonal sales, flash discounts, and product exclusivity have created a compelling environment for consumers to explore digital shopping options. This, in turn, has fueled the demand for credit cards as a convenient and rewarding payment option. As consumers continue to embrace online shopping, businesses must adapt by investing in digital infrastructure and offering seamless payment solutions to cater to this growing segment.
The festive season, in particular, has become a critical period for e-commerce platforms to drive sales and engage with consumers. Attractive promotions, combined with the convenience of doorstep delivery, have made online shopping the preferred choice for millions of consumers. Credit cards play a central role in this ecosystem, enabling shoppers to make high-value purchases without immediate financial strain, thanks to features like no-cost EMI and flexible repayment options.
As the gap between online and offline transaction volumes continues to narrow, the future of retail appears increasingly digital. The growing reliance on online credit card transactions highlights the importance of digital platforms in shaping consumer behavior and market trends. For businesses, this presents both opportunities and challenges. Adapting to the preferences of digitally savvy consumers will require a strategic focus on enhancing online offerings, improving user experiences, and leveraging data analytics to understand and predict consumer needs.
In conclusion, the rise in online credit card payments is a clear reflection of the evolving retail landscape and the growing influence of digital financial solutions. The steady increase in the share of online spending, driven by festive season sales and attractive credit card offers, underscores the transformative impact of e-commerce on consumer habits. As technology continues to advance and consumers seek greater convenience and value, the shift toward digital transactions is set to become even more pronounced, shaping the future of commerce in unprecedented ways.
