A latest report revealed that the number of credit cards in India is projected to reach 200 million, growing at a Compound Annual Growth Rate (CAGR) of 15 per cent. The report by the PwC highlighted that the credit card industry has seen substantial growth, with the number of credit cards issued doubling in the past five years. This trend is anticipated to persist, with the market expected to continue this growth trajectory in the coming years, it stated. "The credit card market in India is expected to double its cards in force by FY28-29, reaching 200 million cards. The industry, which has seen a 100 per cent increase in issued cards over the past five years, is anticipated to replicate this growth within the next five financial" said the report.
The report outlined a significant increase in transactional activity within the credit card industry. Transaction volumes have risen by 22 per cent, and transaction values have surged by 28 per cent. This growth is attributed to the introduction of new products, innovative offerings, and expanded customer segments. However, the report also noted a decline in debit card usage. Both the volume and value of debit card transactions have decreased, indicating a shift in consumer preferences. For FY23-24, debit card transaction volumes fell by 33 per cent compared to the previous year, and spending on debit cards dropped by 18 per cent year-on-year.
Muted growth in debit cards
The report said, "Debit cards in the country have seen a muted growth in terms of the number of cards issued in the year and the volume and value of the debit plastic took a significant hit during FY 23-24". This decline is attributed to the growing popularity of the Unified Payments Interface (UPI), which offers ease of use and has become a preferred payment method for small to medium merchants due to its zero Merchant Discount Rate (MDR).
The report also noted that debit cards have faced challenges competing with credit cards due to less attractive reward programs, contributing to their decline. The lack of compelling rewards and lower awareness of existing benefits have made debit cards less appealing to consumers.
Digital payments see growth
In contrast, digital payments in India are experiencing robust growth, with transactional volume increasing by 42 per cent year-on-year in FY23-24. This trend is expected to triple by FY28-29. The report attributes the continued growth in digital payments to innovations by payment ecosystem participants, new business models, technological advancements, and rising customer awareness.
ALSO READ: What are new credit card rules from September 1? All you need to know
