This is one stat that I am VERY happy with! I am convinced that in the end when the entire economic bubble from the huge deficits breaks around the world .. which it will soon.. credit card use would have been the biggest culprit!
While Indians swiped plastic money worth $6 billion in 2006, credit card users in Korea cumulatively spent $136 billion.
Indians spend just 1% of their total purchases through credit cards while the Koreans make one-fifth of their total purchases through credit cards. The world average hovers around 9%.
“The very low levels of penetration in India offer immense potential for credit card companies. Also, there are fewer credit card companies than those in other parts of the world. The high growth in spending is attracting a lot of entrants into the segment,” said SBI Card CEO Roopam Asthana.
What is drawing a large number of companies and financial institutions including Life Insurance Corporation of India (LIC) to India is the 61% year-on-year growth being witnessed in retail spending, the highest in the world.
Interestingly, even among the rich, credit card ownership in India is the lowest in the world. While 90% of the affluent in Hong Kong have credit cards and the corresponding figure for Sydney stands at 87%, in India, only 28% of the affluent have credit card.
Manila, Jakarta, Taipei , Hong Kong have 48-76% of the affluent population owning credit cards, according to Visa research in Asia. Seoul has 84% of its affluent population owning a credit card. Korea, however, has a history of defaults on credit cards where the government had to bail out the credit card companies.
Sources in the industry say with such low penetration levels there are at least half a dozen companies that are looking to roll out credit card operations in India. AIG, Barclays, and LIC are some of the companies eager to enter the Indian market. Punjab National Bank (PNB) is also learnt to be in negotiations to launch another credit card.