India’s Surging Credit Card Issuance Faces Reward Program Revisions and Misuse Challenges

India's Surging Credit Card Issuance Faces Reward Program Revisions and Misuse Challenges

Asif Iqbal | December 16, 2023 | 07:10 PM IST | Breaking News | Follow on Google News

India’s Surging Credit Card Issuance Faces Reward Program Revisions and Misuse Challenges.image/BNN

India’s Surging Credit Card Issuance Faces Reward Program Revisions and Misuse Challenges

India’s financial services sector has witnessed a significant surge in credit card issuance, reaching approximately 95 million as of October 2023. However, this statistic highlights that only a mere 6 percent of the Indian population currently holds credit cards, revealing a substantial untapped potential in the digital payments landscape.

In response to the burgeoning credit card usage, issuers have embarked on a reassessment of their reward programs.

Notably, categories such as utility bills, insurance, and rent payments are being excluded from earning rewards due to reported misuse. Instances of abuse involve tactics like using personal credit cards for business utility bills, cyber cafes facilitating payments for others’ bills for rewards, and individuals exploiting high-value insurance policy payments for subsequent cancellation and reward accrual.

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Fictitious rent payments made through online platforms have also prompted banks to exclude this category from reward eligibility and impose surcharges on such transactions.This trend of adjusting reward policies risks negatively impacting genuine users of credit cards.

While credit card devaluation typically occurs over time, these adjustments accelerate the process, leading to adverse effects on legitimate users. To mitigate misuse, banks may consider implementing monthly caps on reward-eligible payments rather than outright exclusion of entire categories.

Simultaneously, calls are being made for the Reserve Bank of India to address merchants using incorrect Merchant Category Codes (MCCs) to evade charges, impacting the reward points available to credit card users.

Addressing this malpractice could safeguard the integrity of the reward systems and protect the interests of legitimate credit card users.

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Asif Iqbal

Asif Iqbal is a seasoned news writer with a passion for delivering the latest updates to the public. Currently serving as the senior writer at VoM News, a prominent news outlet known for its comprehensive coverage of diverse topics, Asif has established himself as a reliable source of information. With a keen eye for detail and a knack for storytelling, he consistently provides readers with well-crafted articles that cover a wide range of news categories. His dedication to journalistic integrity and his commitment to staying ahead of the news curve make him an invaluable asset to Vom News, ensuring that readers are always well-informed on the issues that matter most. You can find his work and stay updated on current events by visiting vomnews.in.