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The number of credit cards in India is projected to reach 200 million, driven by a compound annual growth rate (CAGR) of 15 per cent, according to a PwC report. It also highlights that the credit card industry has grown substantially, doubling the number of issued credit cards over the past five years.
This growth trend is expected to continue, with the market likely to achieve similar expansion in the years ahead.
“The credit card market in India is forecasted to double its number of cards in force by FY28-29, reaching 200 million. Having already experienced a 100 per cent increase in issued cards over the past five years, the industry is poised to replicate this growth over the next five financial years,” said the report.
In addition to the rise in credit card issuance, the report highlights a significant increase in transactional activity within the credit card industry. Transaction volumes have grown by 22 per cent, and transaction values have surged by 28 per cent. This growth is attributed to the introducing new products, innovative offerings, and expanding customer segments.
Conversely, the report notes a decline in debit card usage. Debit card transactions have fallen in both volume and value, reflecting changing consumer preferences. For FY23-24, the transaction volume for debit cards decreased by 33 per cent compared to the previous year, while spending on debit cards dropped by 18 per cent year-on-year.
“Debit cards in the country have seen a muted growth in terms of the number of cards issued in the year, and the volume and value of the debit plastic took a significant hit during FY 23-24,” states the report.
This decline in debit card usage is primarily attributed to the rising popularity of the Unified Payments Interface (UPI), favoured for its ease of use and zero Merchant Discount Rate (MDR), making it a preferred payment method for small to medium-sized merchants.
“This degrowth can be attributed to the inclination towards UPI due to ease of use and small to medium merchants pushing for UPI due to 0 per cent MDR,” it said.
Additionally, the report highlighted that debit cards have struggled to compete with credit cards in terms of rewards. The lack of attractive reward programs and limited awareness of existing benefits have made debit cards less appealing to consumers.
In contrast, digital payments in India are experiencing robust growth, with transaction volumes increasing by 42 per cent year-on-year in FY23-24. This trend is projected to triple by FY28-29.
The report attributes the continued growth in digital payments to several factors, including innovations by payment ecosystem participants, new business models, technological advancements, and rising customer awareness.
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