The number of credit cards in India is expected to reach 200 million with a Compound Annual Growth Rate (CAGR) of 15 per cent, highlighted a report by PwC.
The report stated that the credit card industry has experienced significant expansion, doubling the number of credit cards issued over the past five years. This momentum is expected to continue, with the market likely to replicate this growth in the coming years, the report noted.
Alongside the increase in credit card issuance, the report added that the credit card industry has seen a substantial rise in transactional activity. Transaction volumes have grown by 22 per cent, while transaction values have surged by 28 per cent. The report attributes this growth to the introduction of new products, innovative offerings, and the expansion of customer segments.
However, the report also noted a decline in debit card usage. Debit card transactions have decreased both in volume and value, reflecting a shift in consumer preferences. In FY23-24, the transaction volume for debit cards dropped by 33 per cent compared to the previous year, and spending on debit cards decreased by 18 per cent year-on-year.
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).
“This degrowth can be attributed to the inclination towards UPI due to ease of use and small to medium merchants pushing for UPI due to 0 per cent MDR” the report stated.
Moreover, the report mentioned that debit cards have struggled to compete with credit cards in terms of rewards, which has further contributed to their decline. The lack of attractive reward programs and lower awareness of existing benefits have made debit cards less appealing to consumers.
Meanwhile, digital payments in India continue to thrive, with transactional volume growing by 42 per cent year-on-year in FY23-24. This trend is expected to triple by FY28-29.
The report indicated that the ongoing growth in digital payments is driven by various factors, including innovations by payment ecosystem participants, new business models, technological advancements, and increasing customer awareness.
(ANI)