With so much chatter about the rise of UPI and QR code-led payments, it might appear that other payment modes have become obsolete or redundant. However, the truth is far from that.
While UPI has certainly dominated the digital payments space in the last two years due to Covid-19, debit and credit card payments have certainly been showing a healthy growth pattern.
According to Worldline India’s Digital Payments Report Q2 2022, debit and credit card payments accounted for 8% in volume and 14% in value respectively. Together, there are over 1 billion debit and credit cards in circulation.
Specifically, if we talk about just credit cards, the assumption among merchants is that not many customers use them and very few credit cards are in circulation.
Except in the financial year 2020-21, when the payments made via credit cards showed a slump, there has been a steady growth in credit card payments. Credit card circulation increased by 25% from 62.81 million in June 2021 to 78.7 million in June 2022, according to the Digital Payment report. The transaction volume of payments made via credit cards jumped to 22,399 lakh in 2021-22 compared to 17,641 lakh in the previous financial year.
If you are a merchant who is wondering whether you should accept payments via credit cards, read this article to understand why it makes sense to do so.
Advantages of Credit Cards
Credit card is an aspirational banking product. Not everyone can get a credit card as individuals need to clear the bank’s eligibility requirements to become eligible to get one. Unlike debit cards, which are connected to one bank’s savings and current account, credit cards are not linked to one’s bank account.
Getting a credit card means an individual can purchase products and services even if they don’t have money in their account. However, every credit card holder is given a monthly limit of how much they can spend.
This gives credit card holders a whole lot more purchasing power than a debit card holder. Keeping this in mind, let’s look at a few advantages of credit cards and how you can leverage them to increase sales.
- Large ticket size purchases
While UPI and other payment modes like debit cards have shown faster growth rate than credit cards, the latter is better suited for large ticket size purchases. Credit cards come in handy when customers have to make a payment for white label goods, electronic products, gadgets, furniture, etc.
You as a merchant can leverage this shopping pattern to your advantage. Suppose you are a furniture manufacturer and most of your products are priced north of Rs 5,000. When a customer agrees to buy a piece of furniture and hands out their credit card, you can easily accept the payments and benefit from your share of profit. If you don’t have the required payment infrastructure to accept the credit card, you would lose such customers.
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Wondering if not many customers would want to use their credit card to pay? According to the Worldline research (quoted at the top of this article), credit cards are the preferred choice of payment for customers when it comes to buying expensive products.
- International payments and subscriptions
Merchants who wish to sell to global consumers should know that credit cards are the top-most priority for foreign consumers as their mode of payment. Unlike India, where UPI and debit cards rule the digital payment spectrum, global buyers, especially in the West, prefer using credit cards for online payments.
If you wish to sell your products globally, it’s important that you accept money via credit cards.
- EMI payments
After Covid-19, retail purchases on EMI in the country have been on an upswing as people prefer buying even low-ticket items using credit cards and turning them into EMIs.
Although it’s true that debit cards are also eligible for EMI-led purchases, the most attractive offers in terms of discounts are available on credit cards only. Most of the bank and brand offers such as zero-interest EMI purchases are largely on credit cards.
Keeping these in mind, you should look at partnering with a payment gateway that enables credit card payments for you with ease and minimum fee.
Accept Credit Cards With Paytm Payment Gateway
Paytm Payment Gateway has one of the most robust and lightning fast payment systems available in the market. It is secure, reliable, and pocket-friendly when it comes to accepting credit card payments.
Simply open a merchant account with Paytm Payment Gateway and start accepting money from customers via credit cards.
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Unlike other payment aggregators in the industry, Paytm Payment Gateway reconciles credit card payments in a way that you don’t have to wait long before you can see the money in your bank account. With Paytm Payment Gateway, you can rest assured that the money will be credited in your account in T+1 days, that is in one working day.
Frequently Asked Questions
Question 1: Why is it important to accept credit card payments?
Answer: Allowing customers to pay via a credit card means you don’t lose a customer because:
- They only want to pay via credit card
- They don’t have liquidity and thus credit card is the right payment mode for them
- They want to earn reward points using their credit card
- They want to buy on EMI using their credit card
Question 2: Is accepting credit card payments expensive?
Answer: It is true that merchants pay a little more in terms of fee to accept credit card payments. But it is nothing compared to its contribution to increase in sales. Additionally, you get loyal and repeat customers as they know that they can use their credit card on your platform the next time.
