COVID-19 has changed the way people make payments for their purchases. People have started opting for online payments, mobile app payments and contactless payments using credit cards or QR codes over cash payments.
As per the FIS PACE PULSE Survey 2020, 83% of people surveyed preferred digital payments over cash. A major reason for choosing digital payment mode was hygiene concerns and convenience.
Contactless transactions helped people avoid high-touch surfaces, which is impossible while paying in cash.
But as per the report, the remaining 17% preferred using physical payments, citing concerns about the safety and security of contactless payment methods.
Let’s see how COVID-19 has changed the behaviour of credit card users.
How COVID-19 Impacted Credit Card Users
Table of Contents
#1. Preference of Contactless Payment Means
COVID-19 has accelerated the adoption of digital payments by pushing people to choose digital modes over the traditional cash and card payments.
Overall, 45% of FIS PACE PULSE Survey 2020 respondents reported using cash or cheques less than usual during the pandemic period. A good 47% of these respondents were older consumers of age 55+ years and more – an encouraging sign.

It’s also important to note that India right now is the global leader in real-time payments, ahead of UK, Japan and China, handling 41 million real-time transactions per day with an 80% increase in the transaction value.
These findings, noted in the FIS Flavors of Fast 2020 annual report, further showcase a huge customer preference for fast, secure and efficient real-time payment solutions.
Whether it’s an individual or a business, instant payment methods offer convenience, speed and quick fund transfers and are increasingly finding acceptance among the masses.
As per the PACE Pulse Report 2020, 83% of respondents preferred contactless payments for in-store shopping. Payments through mobile apps, online payments, bank transfers and Tap & Pay methods have seen an increase in usage.
The remaining 17% of respondents had security/safety concerns because of which they preferred physical payment modes. This is quite natural! After all, the pandemic period also saw an increase in online frauds and card security issues.
Equally, banks and technology providers have ramped up the card and transaction security measures to keep them a step ahead of fraudsters.
Prominent security methods adopted by banks to make credit card transactions safe have been discussed below.
#2. Banks Were Afraid to Increase the Credit Card Limit
70% of surveyed respondents experienced job-related issues in the past three months of the pandemic, out of which 48% said that they could not sustain household financial expenses for more than 3 months.

In such a scenario, defaults in repayment of outstanding cards would have created an extra interest burden for the customers and credit quality deterioration for the banks.
Banks and credit card companies anticipated the situation beforehand and as a precautionary measure, were reluctant to increase the credit limit for their card users.
There was also news of Axis Bank and Kotak Bank reducing credit limits on a selective basis.
#3. Credit Card Application Process Delay
The number of outstanding credit cards declined from March to June 2020 in comparison to the same period in the year 2019.
For the six months of 2019, starting from January to June, there was an overall increase in the number of outstanding credit cards to the tune of 44 lakh cards.
In comparison, there were only 11 lakh additional outstanding credit cards during the same period in 2020.
Month | No of credit card outstanding | Month | No of credit card outstanding |
January 2019 | 4,51,71,042 | January 2020 | 5,61,20,245 |
February 2019 | 4,60,61,631 | February 2020 | 5,71,58,090 |
March 2019 | 4,70,88,647 | March 2020 | 5,77,45,105 |
April 2019 | 4,79,96,791 | April 2020 | 5,73,60,145 |
May 2019 | 4,89,20,802 | May 2020 | 5,71,79,899 |
June 2019 | 4,96,48,103 | June 2020 | 5,72,89,033 |
Source: RBI Report on ATM and Card Statistics
There were fewer credit card applications because the mobile app payments option was easily available to people during the pandemic.
COVID-19 also forced banks, marketing agents and credit card issuers to take longer processing times because of staff shortages.
Methods Banks Use to Making Credit Cards Transactions More Secure
#1. Only Domestic Card Transactions at ATMs and PoS Terminals are Allowed
Credit card companies ensure that all international transactions, card-not-present transactions, and contactless transaction options are disabled for security reasons while issuing the credit card.
You need to enable the international transaction option and other features through net banking or by calling to the customer care. This is to ensure that the card is used only for purposes set by you.
#2. Chip Credit Cards
Chip cards were introduced in place of the magnetic stripe cards that stored account information such as the cardholder’s credit limit, available balance, and transaction limits on the strip, as they were prone to hacks.
Chip cards encrypt information to increase security when making transactions, whether at stores, terminals, or ATMs.
The microchips embedded in present-day credit cards do not store personal information, only the necessary information needed to authenticate, authorize and process transactions.
#3. Flexibility to Switch the Transactions
Credit cardholders can now “switch off”, or “switch on” their credit card at any time 24×7 for ATM transactions or online payments.
Net banking or associated apps help you set the “switch on” or “off” options. You can enable the payment feature when required and then disable once done.
For example, if you want to pay in USD for online purchases then you can switch to international online payment and later switch off after the transaction is complete.
#4. Banks Offer Lost Credit Card Liability Insurance
The lost card liability insurance protects credit card users from fraudulent purchases and payments made on their stolen cards. You need to inform your credit card issuer of the card loss immediately to get the protection.
Banks offer lost credit card liability cover so that you are saved from any financial losses after you have informed your bank of the card loss.
#5. Confirmation Calls on Credit Card Usage
As an added safety measure, banks call customers regarding their transactions on credit cards whenever they find any suspicious or abnormal card activity.
The confirmation calls add a level of safety, where the bank verifies that you are aware of the transaction.
How Banks Can Make Credit Card Transactions More Safer
#1. Option to Create Temporary Purchase Numbers
Using virtual technology, banks can provide the option to generate single-use card numbers for online purchases.
That way, it doesn’t matter if your virtual credit card number is compromised since you are never going to use it again. For each transaction, you get a new number and your actual card remains safe with you.
#2. Two-Way Authentication for International Transactions
There is no PIN requirement for international transactions. That is precisely why most credit card frauds happen while making international transactions.
Banks should allow thorough two-way authentication using a password and OTP so that international fraud on credit card usage can be avoided.
#3. Eliminating Third Parties for Document Collections
Still, few banks collect necessary documents required for credit card applications like Aadhar card, PAN card, salary slip, ITR through third parties.
Third-party agencies can misuse the information to get credit cards on their name without your knowledge or get involved in malpractices like data selling.
Banks should bring all document-handling processes online to minimize risk.
#4. Blocking Suspicious Websites and IP Address
Fraudsters dupe credit cardholders of sensitive information by creating a fake website or payment link sent over SMS.
Banks should block such suspicious websites and warn customers to refrain from opening unsolicited SMS and emails and sharing confidential information like PIN with anyone.
Final Thoughts
COVID-19 has impacted income levels and has pushed people to adopt digital payment options. But there are still people using physical payment methods due to security concerns.
Tap & Pay methods and online payments using credit cards are convenient and protect you from surface contact in pandemic times. The security measures by banks ensure that your money and information is protected so that you transact safely every time.

Hi Pradeep,
Appreciate your efforts in bringing this useful article to us.
Thanks & regards