Friday Nov 15, 2024
Friday Nov 15, 2024
Wednesday, 2 May 2012 01:34 - - {{hitsCtrl.values.hits}}
The country’s credit card market which suffered a setback in 2010 has bounced back last year whilst showing signs of further growth this year though downturn in the economy could pose challenges.
Last year the active cards base grew by grew by near 11% or near 84,000 to 862,340, highest level in three years catching up some lost ground in the peak year of 2008 with a base of 917,418 cards.
Outstanding balance however rose to an all time high of Rs. 38.5 billion last year.
Payments via credit cards have increased as well. As per Central Bank, in 2011, the value of transactions through the credit card payment system amounted to Rs. 93 billion, up 24% from 2010’s figure of Rs. 75 billion. The number of transactions rose by 13% to 18,609.
In a related development, payments via debit cards, relatively new in comparison to credit cards, rose to Rs. 24 billion from Rs. 16 billion in 2010. Debit card transactions rose to 8,346 from 5,340 in 2010. In 2011, with the intention of standardising the practices of credit card issuers, the Payment Card Industry Association of Sri Lanka (PCIASL) issued a common code of conduct for the card issuers, in consultation with the Central Bank.
Lowering of interest rates to an average of 24% last year especially in the latter part fuelled growth in credit card market in tandem with improving incomes and lifestyles.
In 2010, the average interest rate charged on credit cards ranged between a low of 22% and a high of 36 for cash and 22% and 26% on credit.
As per latest available data, the growth in credit cards has continued on to 2012 as well. Slightly over 12,000 new cards have joined the base increasing the figure by end February 2012 to 874,400. Whilst January produced over 7,000 new credit card customers, the following month almost halved perhaps reflecting the rising cost pressures, inflation and economic downturn posing challenges to the industry.
However, given the aggressive nature of the competition among the popular and leading card brands as well as innovative promotions and offerings, the market is likely to credit card remain buoyant.
The Central Bank has forecast economic growth in 2012 to be around 7%, below 8.3% achieved last year. This signals an economy that is consolidating two years of over 8% growth but analysts noted that a rebound in consumer spending and option to go for plastic money hinges on how best the country manages its shocks to the economy.
