The consumerism boom and increased acceptance of online payment mechanisms have resulted in rising frauds in the last one year. According to industry experts, incidents of frauds have touched 3-4% of the turnover, estimated at Rs 20,000 crore.
Unless immediate steps are taken immediately, the problem could aggravate in 2008, warn banks and credit card card issuers.
In addition to frauds, default rate in credit card has also seen a steady increase, touching about 9%. According to Credit Card Management Consultancy, the focus must be on managing recoveries while credit card issuers and banks should also ensure tighter credit quality in a bid to handle the issue.
Issuance of multiple cards to an individual has aggravated the problem. ?Consumers tend to shift from one card, once its credit limit is exhausted and this has led to the rise in default rates,? an insider said.
However, the average spend on credit cards is still very low in India compared to other developing countries including China. A consumer here spends about Rs 2,500-3,000 per month on his/her card while consumers in other Asian countries spend at least three times more. ?With all the efforts that are being made by card issuers and banks to increase usage, the lending against credit cards is set to show a healthy growth,? an analyst said. There are about 25 million credit card holders in the country.
