Indian Credit Card Industry Outlook to 2027

The publication titled “Indian Credit Card Industry Outlook to 2027: Driven by adoption of contactless payments, shifting consumer preferences towards cashless mode of payments, rising disposable income and digitalization” provides a comprehensive analysis of the credit card industry in India. The report covers various aspects including credit card industry market size on the basis of revenue, market overview, genesis of the market, India credit card industry Cycle, overview of credit card services/ Products, ecosystem of entities in the Indian credit card industry, consumption expenditure and borrowing trends, emerging business models- Loan against Credit Cards, value chain analysis of credit cards, growth drivers, restraints and challenges, major trends and developments, alternative assessment for NIP (no-income-proof) customers for credit card offerings, collection risks associated with credit card,key metrics of credit card issuers in India, government initiatives in the Indian credit card industry, Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Jan Dhan Awas Yojana (PMAY), collection risks associated with credit card, initiatives to promote access to data & innovation, regulatory sandbox, launch of India stack, recognising P2P lenders, increase in number of fintech start-ups, growth of digital lending, and evaluation of KYC norms. Insights on competitive landscape of credit card industry, company profile of major FinTech’s playersoperating in the ecosystem on the basis of Company Overview, About the Company, Revenue Model, Funding and Investors, Key Features, Fee Structure, Product Offered, Strengths, Recent Developments, Key Takeaways and Financials- 2018,2019,2020 & 2021 and company profile of major Bank playersoperating in the ecosystem on the basis of Bank Overview, About the Company, Business Model, Product Offered, Key Features, Strengths, Recent Developments and Key Takeaways is also covered in the report. The report also covers Business Model Analysis of NewGen Cards, Business Model Analysis of BNPL Cards and Business Model Analysis of Loan EMI Cards. Further report also focuses on the Indian Credit Card Market Segmentation By Purpose of Usage (Shopping/Non-ATM Purposes and ATM Withdrawals), By Payment System Operator (VISA, Mastercard, Rupay, America Express and Others), By Type of Credit Card (Personal and Commercial Credit Card), By Average Ticket Size of Loan Disbursement (Less than Rs. 25,000, Between Rs 25,000- Rs. 50,000, Between Rs. 50,000- Rs. 100,000 and More than Rs. 100,000). Indian Credit Card Market report concludes with projections for the future of the industry including forecasted industry size by revenue by 2027, and analysts’ take on the future highlighting the major opportunities.

Indian Credit Card Market Overview and Size

Indian credit card market expanded with substantial growth in between 2017 and 2022 with massive expansion in the adoption of credit card as the mode of payment due to rising industry valuation, trend of contactless payments and the emergence of credit card lending startups going beyond the typical credit card issuance model. The primary factors driving the market growth is the emergence of instant payment anytime and anywhere, rising internet penetration in the country, growing awareness among the users, controlled, secured and efficient transactions with convenience of use and a highly rewarding experience provided by the market players to their users. The volume of digital payments in India grew by 33% during the financial year 2021-2022. These payments are assisted by advanced technology and are, therefore, quick, simple and convenient. When these payments are assisted by credit products, they boost the purchasing power of people. Digital lenders like LazyPay have made these payment facilities widely accessible to all kinds of Indian residents in all major tier-I and tier-II cities. On the other hand, consumers too are increasingly being drawn to digital payments due surging adoption of contactless payments post COVID-19 which is also contributing in the growth of credit card market by increasing their userbase. The smartphone penetration rate in India is projected to increase from 54% in 2020 to 96% in 2040. As more and more people across India, including people in rural areas, use smartphones, they get increasingly exposed to digital payment modes.

In the wake of the pandemic, the National Payments Corporation of India (NPCI) encouraged customers and providers of emergency services to adopt digital payment systems, ensuring the safety of contactless transactions. As a result, transactions increased to some extent. However, reduced international travel due to restrictions imposed during the 2020 - 2021 period negatively impacted credit card usage during that time. Revenue levers are likely to be hard to pull as several customers are unwilling to use credit cards frequently. Therefore, various cost management strategies need to be adopted by issuers to attract customers and attain a competitive and robust future for the credit cards market.

Indian Credit Card Market Segmentation 

By Purpose of Usage (Shopping/Non-ATM Purposes and ATM Withdrawals): Credit Card market in India can be segmented on the basis of Purpose of Usage: ATM Withdrawals and non- ATM Purposes where number of credit cards issued for non-ATM purposes accounted for the highest market share as compared to the ATM withdrawals on the basis of revenue generated in the year 2022. Attributed to the fact that after Covid-19, there is an increase in online shoppingrather than going to the stores which in turn increased the credit card usage. 

By Payment System Operator (VISA, Mastercard, Rupay, America Express and Others): Credit Card market in India can also be segmented on the basis of Payment System Operator: VISA, Mastercard, Rupay, American Express, etc. where VISA is dominating the market share since 2017 whereas market share of Mastercard has declined in 2022 as RBI had barred Mastercard in 2021 from enrolling new customers for not storing their data in India. 

By Type of Credit Card (Personal and Commercial Credit Card): Credit Card market in India can be segmented on the basis of Type of Credit Card: Personal Credit Card and Commercial Credit Card where Personal Credit card are dominating the Indian credit card industry when compared to the commercial credit card on the basis of revenue contribution in 2022. This is due to the fact that Credit card companies often offer 0% APR on purchases and/or balance transfers for a limited period of time with better promotional incentives in case of personal cards.

By Average Ticket Size of Loan Disbursement (Less than Rs. 25,000, Between Rs 25,000- Rs. 50,000, Between Rs. 50,000- Rs. 100,000 and More than Rs. 100,000):  Credit Card market in India can also be segmented on the basis of Average Ticket Size of Loan Disbursement: <25,000, 25,000-50,000, 50,000-1,00,000, >1,00,000. Ticket size between Rs 50,000 to Rs 100,00 captures the major market share in 2022 on the basis of revenue contribution. The overall volume of loan disbursements through the digital mode grew more than twelve-fold between 2017 and 2020.

Competitive Landscape in Indian Credit Card Industry

Traditionally, Indian Credit Card Industry has been dominated by banks such as HDFC, SBI, ICICI and Axis. However, FinTechs such as  Slice, OneCard, Uni Cards, PostPe, LazyPay are disrupting the banking space by changing the whole ecosystem of how banks traditionally work and bringing in a digital change across all segments. In the last few years, the credit space has seen some of the most popular offerings globally by neobanks. New players are entering the credit space in India and have started providing credit cards and digital lending via BNPL, EMI and other services. These FinTech start-ups are also partnering with traditional banks to launch new products and services in the untapped market. These Credit Card issuing Platforms in India compete on the basis of user-friendly interface, easy and quick KYC norms, advertisement, wide range of investment options they offer, EMI/loans, NIP and low transaction fees. One of the major competition parameters is facilitation of secure transactions, rewards and cashbacks provided for traction of users, hassle free payments without waiting for OTPs, transparency and service diversification such as wallet options, using virtual credit cards as mode of payment for buying goods/services instead of fiat currency being provided by the credit card issuing platforms to their users. Credit card companies often offer 0% APRon purchases and/or balance transfers for a limited period of time with better promotional incentives in case of personal cards which has led to higher issuance of these cards when compared to credit cards issued for commercial purposes. However, in coming years, the international credit card issuing platforms are eyeing a piece of the Indian credit card, either through independent operations or co-branding partnerships. In essence, the credit card industry has a lot more potential to flourish across the country if its pain points can be resolved fast, paving the path for a robust penetration of Credit cards.

Indian Credit Card Market Future Outlook and Projections

Indian credit card market is expected to expand with a single digit CAGR in between 2022 and 2027 on the basis of revenue generated. It is anticipated that credit card industry will grow owing to factors such as due to wider acceptability at shops and better product offeringsin a competitive landscape in the coming years. India has been culturally conservative towards credit and it is always seen as a debt trap instrument. But new-age start-ups are very focused on changing this mentality by creating awareness about how credit cards and BNPL can be used for daily expenditure. Many new FinTechs will be entering the Indian credit card space by offering credit cards to individuals and corporates. All FinTechs in this space are trying to attract customers through their digital offerings and will witness significant growth in new credit card customers in the coming years. Banks are also exploring partnerships with FinTech players to acquire new customers to their platforms. Traditional players need to take a cue from these players to enhance their offerings in the coming future. The credit EMI market has traditionally been dominated by offline retail. However, due to advent of COVID-19, online buying is gaining traction among the customers. Players in this sector need to focus more on building the omnichannel ecosystem to cater to both the offline and online market.