Rising Digitalization is influencing the India Credit Card Market Growth
Rising ease of availing Credit Card, growing preference for
digital transactions, increasing security, and surging focus upon digital India
initiatives by the Government of India are influencing the demand of Credit
Card market in India.
According to TechSci Research
report, “India Credit Card Market
– By Region, Industry Size, Share, Trends, Competition, Opportunities and
Forecast, 2018-2028F,” The India credit card market
has tremendously seen a major boost in the demand of credit cards in recent
years. This is due to the rising awareness about credit cards, increasing
co-branded card offerings, rising spending power of millennial and Gen Z, and
gradual shifting of people towards cashless transactions. An electronic card known as credit card, is given
to users and cardholders by a bank or any other financial institution so they
can make purchases of goods and services, both online and offline. Fund
transfers can also be done using credit cards. A credit card makes life easier
for users because it is a pre-approved loan.
Credit cards offer users a practical way to make
purchases and settle debts (such as electric, water, and recharge bills) by using
money from banks or other financial institutions. A credit card also enables
users to make initial purchases of goods and services and make subsequent
payments. Users or cardholders of credit cards must pay the credit card company
back, within the allotted time frame. The credit card company gives the
cardholder a set amount of time to pay off the balance before adding interest.
With the start of the holiday season, when spending tends to stay high,
sector participants anticipate additional gains in credit card spending. To
encourage festival spending, many issuers have prepared special credit card
offers, and based on recent trends, they anticipate a successful holiday
season. Due to expenditure during the holiday season, expenditures reached USD13.42
billion (Rs 1 trillion) mark for the first time in October of last year. The
number of credit cards in the banking system increased by 1.53 million in July,
bringing the total to over 80 million. The increase in credit cards was led by
HDFC Bank, which added 344,364 credit cards in July, bringing the total number
of credit cards it currently has out there to 17.94 million (227,614 cards).
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The India Credit Card Market
is segmented based on Type, Service Providing Company, Credit
Score, Credit Limit, Card Type, Benefits, Region, and by Competitional
Landscape. Based on type, the market is further fragmented into General
Purpose & Private Label.
Credit card market is expanding
the fastest in India because of growing partnerships between banks and
financial institutions, association with businesses like hotels, gas stations,
e-commerce sites, etc., and various discounts and offers available while
shopping online. For example, the world's largest online retailer Flipkart and
Axis Bank have introduced a co-branded credit card that offers limitless
cashback on certain purchases. This card offers unlimited 5% cashback on
purchases made on Flipkart, 2GUD, and Myntra for a fee of USD6.71 (Rs. 500). An
individual receive unlimited 1.5% cashback on all other purchases, as well as
four free visits per year to Indian airport lounges.
Based on Service
Providing Company, the market is segmented into Visa, Mastercard, RuPay & Others.
According to reports, Visa and
Mastercard controlled 95% of all credit cards in use as of January 2022,
dominating the credit card market. Due to their established relationships,
banks have preferred using Visa and Mastercard for their credit cards. Banks
receive the substantial share of the market-driven transaction fee. As a
result, RuPay lacks the benefit that debit cards do. Customers also favor Visa
and Mastercard because of their widespread acceptance.
Key market players in the Credit
Card Market of India include:
- HDFC Bank Ltd.
- SBI Cards and
Payment Services Limited
- ICICI Bank
Limited
- Axis Bank Limited
- Citibank India
- Bank of Baroda
- RBL Bank Ltd.
- Kotak Mahindra
Bank Limited
- Punjab National
Bank
- IndusInd Bank
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According to the RBI, Tier I
cities account for 65% of credit card penetration. Tier II and III cities have
experienced significantly less penetration, in comparison. However, there has
been a significant rise in the population of salaried customers in tier II and
III cities, such as Surat, Nashik, and Kanpur, as a result of opening of new
business centers, increased economic activity, the entry of major brands across
categories, and the emergence of manufacturing and service-based economies.
With this shift in market dynamics, it is crucial that product propositions are
alluring and targeted at the key demographic in these cities. Customer
segmentation becomes one of the most important tasks for the issuing banks in
order to facilitate this. Therefore, issuing banks need to be aware of their
target audience.
“Due to the increased
purchasing power of cardholders as the economy is expected to rebound, the
credit card industry is anticipated to pick up steam (and prospect
cardholders). Only 5.5 credit cards are issued for every 100 people in India,
leaving plenty of room for the credit card industry to expand (compared to 32
cards per 100 people in the US). Although other digital platforms like
e-wallets and buy now pay later options are major competitors of credit cards
in the nation, the credit card industry is now anticipated to grow even more as
credit cards can now be linked to UPI. These factors may influence the growth
of the India Credit Card Market in the forecast years,” said Mr. Karan Chechi,
Research Director with TechSci Research, a research based global management
consulting firm.
“India Credit Card
Market, By Type (General Purpose & Private Label), By Service Providing
Company (Visa, Mastercard, RuPay & Others), By Credit Score (300 – 500, 501
– 700, 701 – 850 and Above 851), By Credit Limit (Upto 25 K, 25-50K, 51k-2L
& 2-5L), By Card Type (Base, Signature and Platinum), By Benefits (Cashback
& Voucher), By Region, Competition, Forecast
& Opportunities, 2018-2028F”, has evaluated the future
growth potential of India Credit Card market and provides statistics &
information on market size, structure and future market growth. The report
intends to provide cutting-edge market intelligence and help decision makers
take sound investment decisions. Besides, the report also identifies and
analyzes the emerging trends along with essential drivers, challenges, and
opportunities in India Credit Card market.
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