New Delhi: It was highlighted in a report by PwC that the number of credit cards is expected to reach 200 million with a CAGR of 15 per cent in India.
The number of credit cards issued have doubled over the previous five years showing that the credit card industry has experienced a substantial expansion, stated the report. This pace is expected to continue as the market will possibly replicate this growth in the following years.
The report said that the credit card market is expected to reach 200 million, doubling its numbers in effect by FY28-29. Over the previous five years this industry has witnessed a 100 per cent rise in the cards issued and is expected to replicate this growth in the five following fiscal years.
The report added that the credit card industry has also witnessed a significant increase in transactional activity. Both transactional volumes and transactional values have boomed by 22 per cent and 28 per cent, respectively. Introduction of new products, expansion of customer segments and innovative offerings contribute to this growth.
However, the report also highlighted a change in consumer preferences as debit card transactions lowered in both value and volume. In FY23–24, there was a 33% decline in debit card transaction volume over the prior year and an 18% annual decline in debit card spending.
The research said that the number of debit cards issued in the nation has grown somewhat each year, but during FY 23–24, the volume and value of debit plastic significantly decreased.
The rising popularity of the UPI is the cause of this decline as UPI offers seamless transactions and has become a preferred payment method for small and medium merchants because of its zero Merchant Discount Rate (MDR).
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The report also noted that another reason of debit cards' decline is that they have struggled to compete with credit cards in terms of rewards. Debit cards don't appeal customers as much due to the lower awareness of existing benefits and lack of attractive reward programs.
However, digital payments in India continue to flourish with transactional volume increasing by 42 per cent yearly on FY23-24. By FY28–29, this trend is predicted to quadruple.
According to the report, new business models, technological improvements, growing customer awareness, and innovations by players in the payment ecosystem are some of the drivers driving the continuous growth in digital payments.
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