Digital adoption accelerates pace – UPI, online spending leads; July card spends not robust
If ‘Payments’ are passable indicator to draw inferences regarding customer spending and behavioural pattern, we reckon: Retail activity levels are almost back to ~90% of pre-Covid levels after contracting to 55-65% in April. Including non-retail, activity levels have retraced to >80% after having halved in April. (Disclaimer: July would include previous months’ pending payments/transactions as well);
* Encouragingly, pace of digital adoption across channels/touchpoints has accelerated – digital mode constitutes >87% of retail payments including NEFT (<80% in FY20) and >65% excluding NEFT (from <50% in FY20);
* Contactless payments (UPI) witness remarkable momentum accounting for 24% of overall payments (UPI transaction value has almost double YoY and up >35% preCovid level to Rs2.9tn). Value transacted on mobile banking platform up >20%;
* Pace of rebound in card spends were not as robust in July as May/June; credit card spends are still at 70% of pre-Covid levels and debit card spends at 80%; proportion of online spends has risen by 10% points to 55-56%;
* Recovery in spending pattern is relatively superior amongst leaders, especially, SBI Cards, HDFC Bank, RBL while Axis and IndusInd have comparatively lagged;
* Banks are now risk averse both in terms of rolling out new credit cards as well its restricting limits – reflected in steadily rising debit card usage relative to credit card.
* Cheque bounce trend not overwhelming in August – recurring payments bounce rate elevated at 32% and overall cheque bounce rates at 8%.
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