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It must be noted that the number of credit cards issued crossed the 100 million mark in February 2024 itself.
Ramakrishnan Gopalan, Vice President and Head of Products & Solutions for Visa India and South Asia, notes, “This achievement signifies a shift towards greater acceptance of credit as a vital financial tool.”
Driving factors behind credit card adoption
Several factors are contributing to the surge in credit card adoption in India:
Economic growth
Gopalan points out that “India’s economy is on track to become the third largest by FY31.” This economic expansion is fostering increased purchasing power, driving demand for credit cards, which offer benefits such as convenience and security.
Technological advancements
The rise of digital payments is transforming how consumers manage their finances.
Gopalan highlights innovations like tokenisation that protect sensitive card data while enhancing the user experience.
Diverse product offerings
Specialised credit cards
tailored to various consumer segments have emerged. Gopalan mentions cards like the HDFC Bank Pixel Credit Card, designed for Gen Z consumers, and lifestyle-focused cards like HSBC Live+, which cater to affluent travellers.
“These offerings reflect successful collaboration among stakeholders in the payments ecosystem to enhance credit card adoption,” he adds.
Growing e-commerce
The e-commerce boom has significantly influenced credit card usage.
Gopalan notes, “According to Visa Consulting and Analytics, there was a 25% increase in credit card spending on e-commerce platforms during Diwali 2023 compared to the previous year.”
This trend stresses the growing reliance on credit cards for online transactions.
Changing consumer behaviour
The proliferation of credit cards has led to a notable shift in consumer spending patterns.
Gopalan states, “With the financial freedom that credit cards provide, consumers can now make larger purchases and indulge in experiences like travel that were previously considered out of reach.”
Credit cards enable access to higher-quality goods while allowing consumers to spread costs over time.
Bright future
The outlook for credit card adoption in India remains promising. Gopalan emphasises the potential of India’s young population, with 63% in the working age, and an aspiring middle class expected to surpass 700 million by 2030-31.
“The ecosystem is actively innovating, developing new or niche products with attractive rewards to appeal to a broader audience,” he notes.