With the onset of the coronavirus pandemic, contactless payments have seen a huge spurt in demand, which has resulted in increased issuance of debit as well as credit cards in the country. Over the last few years, the credit card industry has grown significantly in India with many developments happening in the space which include various innovations and changes in technology. Credit card issuers are also making efforts to bring more innovation and awareness to the segment that will contribute to the growth of India’s credit card market.
However, the adoption of credit cards has been fairly paltry across India, with only around 3% of the population having a credit card, which is way off the 30% benchmarks set by World Bank. The Indian middle class mostly has a conservative stance towards credit card usage, with belief that high fees would ultimately lead to no benefit, and hence restrain themselves to use credit cards, which is definitely not a good sign. So, will the credit card industry in India sustain its positive growth in the future? Let’s find out.
1. The financial services sector has witnessed a massive shift towards digital technology; growth is primarily driven by retail loans and increasing penetration of credit cards in the economy
2. The Credit Card Industry is currently in its growth stage, with Credit Card issuance growing at a roughly 20% CAGR over the last 5 years
3. Introduction of BNPL & increasing popularity of contactless payments post-pandemic among others is contributing to enhancing the adoption of Credit cards in the Indian Market
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4. Adoption of Cashless Society coupled with adoption of usage of credit cards at Transit Systems are driving the Credit Card Industry Growth in India
5. To expand the consumer base and include NIP customers, Alternate Assessments like Employment letters, Fixed Deposits, Add-on cards, and Healthy bank balances are done
6. Though the Credit Card consumer base is at the expansion stage, there are a few challenges associated such as new regulations, and low penetration
7. However, Indian government is performing a major role in the journey of credit card adoption and helping the industry to thrive in the country with a CAGR of ~24% in the future
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