The rising ease of availing Credit Cards, growing preference for digital transactions, increasing security, and surging focus on digital India initiatives by the Government of India are influencing the demand for Credit Card market in India. According to the TechSci Research report, “India Credit Card Market – By Region, Industry Size, Share, Trends, Competition, Opportunities and Forecast, 2018-2028F,” The Indian credit card market has tremendously seen a major boost in the demand for credit cards in recent years.
The Important Factors of the India Credit Card Market
This is due to the rising awareness about credit cards, increasing co-branded card offerings, the rising spending power of millennials and Gen Z, and the gradual shifting of people towards cashless transactions. An electronic card known as a 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 expenditures during the holiday season, expenditures reached the 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, associations 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 retailers Flipkart and Axis Bank have introduced a co-branded credit card that offers limitless cashback on certain purchases. This card offers unlimited 5% cash back on purchases made on Flipkart, 2GUD, and Myntra for a fee of USD6.71 (Rs. 500). An individual receives unlimited 1.5% cash back 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 a 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 the 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 make sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in the India Credit Card market.
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