The credit card industry in India is experiencing significant growth, with the number of credit cards expected to reach 200 million in the coming years. A report by PwC highlighted that the industry has doubled 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 future. Transaction volumes and values have also seen a substantial increase, attributed to the introduction of new products, innovative offerings, and the expansion of customer segments.
On the other hand, debit card usage has seen a decline in both transaction volume and value, reflecting a shift in consumer preferences. This decline is primarily due to the growing popularity of the Unified Payments Interface (UPI), which offers ease of use and zero Merchant Discount Rate (MDR) for small to medium merchants. Debit cards have struggled to compete with credit cards in terms of rewards and benefits, further contributing to their decline in usage.
The report also highlighted the thriving digital payments landscape in India, with transactional volume growing by 42 per cent year-on-year in FY23-24. This growth is expected to triple by FY28-29, driven by innovations in the payment ecosystem, new business models, technological advancements, and increasing customer awareness. Digital payments are becoming increasingly popular due to their convenience and ease of use.
Overall, the credit card industry in India is on a path of steady growth, with the number of credit cards expected to double in the coming years. While debit card usage has seen a decline, digital payments continue to thrive in the country. As the payment landscape evolves and new technologies are adopted, the way consumers transact is also changing, with a focus on convenience, security, and reward programs. It will be interesting to see how these trends continue to shape the financial services industry in India in the future.
