Covid-19 impact on credit card users in india | Credit Help India


Credit democratization is getting a large portion of the population into the credit system. A large population may get credit for as little as Rs 15,000 using digital cards. Credit cards have a low penetration rate and have higher prices. They are, however, widely accepted and can be difficult to dislodge.

The credit card industry is about to be disrupted, and tech giants are at the forefront.

Almost every FinTech company these days is dabbling in lending. They use non-traditional data points to extend credit lines to those who may not otherwise have had access to them, thus massively increasing the pie of people to whom credit can be extended and grow quickly.


Since it does not use Master-Visa Payment rails, but rather UPI, which has a wider acceptance for both P2P and P2M payments, a digital credit card or virtual card is radically different from the plastic credit card issued by banks.

Customers can be issued digital credit cards for a fraction of the cost and with limits as low as Rs 15,000, potentially reaching a market of 300-500 million Indian customers in addition to the global market.

Furthermore, digital credit cards are more safe than plastic credit cards because physical card fraud is not a possibility. The cell phone serves as an authentication system since no card data is stored on it.

The MPIN serves as a safety check even if the phone is stolen, and in the case of higher spending, the mobile camera is turned on for face recognition to authenticate payments.

The credit card cannot be used as the OTP by a hacker with a cloned mobile number, and the device information is locked to the physical device.


‘Buy Now, Pay Later' (BNPL) products have made a major comeback in recent years and are gaining widespread popularity as an alternative payment method.

Credit card applications are a more time-consuming process that can take days, if not weeks, to be processed. Furthermore, younger generations often are unable to obtain credit cards because they lack the required credit history. Finally, the BNPL consumer experience is much superior to other credit card interfaces thanks to intuitive applications.

Due to legacy market models, underwriting processes, and high operational costs, credit cards currently only serve 30 million salaried workers. In India, however, there are 900 million debit card users and over 450 million PAN card numbers with some credit background that can be serviced with digital cards.

The company has too many costs: about Rs 4,000 per card issued must be charged to cold-callers, call centres must be managed, billing disputes and frauds must be dealt with, and incentive programmes must be run, all of which make small-ticket earnings unviable.


Credit cards can take a long time to disappear. To begin with, credit cards have the advantage of having a much higher card acceptance rate at merchants all over the world. A BNPL customer is currently unable to pay for daily groceries at Woolworths or Coles, or to rent a car in another country. Visa and Mastercard have built a truly global point of sale and online payment ecosystem, with more than 40 million retailers worldwide accepting their cards. Contracts with merchants are in place for BNPL suppliers that are a fraction of those. Furthermore, cross-border transfers with BNPL are still a work in progress.

When BNPL customers pay their instalments, they do so through existing schemes' payment rails (VISA, Mastercard) or through a bank account. This means that the schemes aren't entirely removed from a BNPL transaction.

In addition, forming partnerships to leverage each other's strengths will benefit the payment and unsecured credit providers in the ecosystem.


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