Having a constant stream of cash flow is a huge blessing for businesses, especially small and medium businesses that don’t have deep pockets to fund growth.
One of the ways to maintain a steady cash flow is to integrate all types of payment methods to your online store. In this regard, accepting payments through credit cards is very important as more and more Indians are applying for credit cards.
As of September 2021, credit card circulation saw a year-on-year jump of 10.78% according to a report titled “India Digital Payments Report” by Worldline. In comparison, debit cards reported a rise of 8.65% in the same time period. While the volume of credit card transactions in Q3 2021 was at 557.24 million, the value of transactions stood at Rs 2.32 trillion.
Although debit cards still dominate the card circulation in the country, the numbers show that there is a considerable rise of credit card users.
Difference between debit and credit cards
The two types of cards – credit and debit card – that are issued by banks look almost identical but have different functions and use cases. Let’s understand the difference between the two.
Both, debit and credit cards of the same size, have the name of the account holder, bank name, 16-digit card number, validity date, and the name of card issuer like Visa, Mastercard, or RuPay. The front side of debit and credit cards, which features these details also has an EMV microchip that electronically stores all the data.
On the backside, there is a magnetic stripe which also stores useful information and comes in handy when the card is swiped at POS machines.
Debit Card | Credit Card |
Issued to everyone who has a bank account | Issued to select users based on their credit score |
| Money is deducted from the users’ bank account linked to the card | It is a debt instrument, which allows consumers to pay for their purchases even when they don’t have money. At the end of 30 days, users have to pay back the money to their bank |
| Can be used at ATMs to withdraw cash | Some banks charge extra fees for cash withdrawals from ATMs |
| Spending power depends on the amount one has in their bank account | Spending power depends on the amount of credit one can get from the bank |
| No interest fee | Users must pay interest or late fee if the credit card bill is not paid on time |
| Not friendly for EMI and international payments | Specifically suited for EMI and international payments |
| Payments via debit cards don’t usually give users added benefits such as discounts, points, etc. | Credit card users get points and special discounts for every payment |
Typically, a debit card is linked with users’ bank accounts in which they deposit money or accept payments from different sources. When debit cards are used for payments or to withdraw money from ATMs, the money from users’ bank accounts is deducted.
Credit cards, which are essentially a debt instrument, are issued by banks to select users based on different factors. Depending on one’s creditworthiness, or credit score, banks offer a certain amount of credit limit attached to the user’s credit card.
When one pays for a purchase using their credit card the amount is added to their outstanding balance. Every 30 days users have to pay the credit card bill to the bank. Banks charge interest to the credit card holder if the bill is not paid on time.
Benefits of accepting payments via credit cards
As a business, letting users pay from their credit cards has several benefits.
- Legitimacy: To begin with, it gives your business added legitimacy. This is specifically important if you have recently launched your business. Accepting credit card payments gives the impression that your business is in for a long haul and is not a fly-by-night kind of an operation.
- Customer-first approach: Allowing customers to pay via their credit cards comes with an added cost that you will have to pay to the payment gateway. Paytm Payment Gateway charges 1.99% to process every credit card payment.
However, the fact that you are ready to pay for your customers’ convenience shows your customer-centric approach. The fee is nothing compared to the credibility you will get from your customers. - Competitive edge: Not many businesses are ready to accept credit card payments. And if you are one of the few that does allow customers to pay through credit card, you have beaten the competition at least on one front.
- Drop in cart abandonment: Giving your customers all the payment options including credit cards, means it’s less likely that they will dump the cart on the checkout page.
Accept credit card payments via Paytm Payment Gateway
Credit card payments in India are on a steady rise. An RBI report said credit card spending jumped 57% in September 2021 on a Y-o-Y basis to Rs 80,000 crore.
This is the right time for businesses that have been only accepting payments via debit cards and other payment modes, to get on to the credit card payments rail.
Integrate your business with Paytm Payment Gateway and start accepting payments from credit card users now.
