Credit and debit card market base in India
With an emerging middle class, the number of credit and debit cards gathered pace in India as well. It was forecast that the number of credit cards would reach around 44 million by 2025, and the number of debit cards around 970 million. A few years ago, India was the country with the most debit cards in use worldwide. This development can be partially attributed to the Pradhan Mantri Jan-Dhan Yojana scheme, under which over 300 million RuPay debit cards have been issued. RuPay was initiated in 2012 as the domestic alternative to Mastercard, Visa, and Union Pay. Currently, the debit card market in India is largely dominated by public sector bank, State Bank of India, and HDFC bank holds the highest share in the credit card market.Fintech disruption in credit card industry
Although India’s credit card market is still underpenetrated, the pandemic saw a surge in online shopping. During this period, credit cards provided easy access to money, reflected in higher growth in the transaction value of credit cards as compared to debit cards. Although the credit card industry initially focused on high-income, salaried professionals belonging to tier-I cities and having good credit scores, there has been an emerging trend towards attracting a wider customer base and adoption by offering discounts such as reward points, cashback, and referrals.The expansion of digital payments has also disrupted the credit card industry. Various FinTech players are offering credit cards in collaboration with banks and digital lending or Buy Now Pay Later partners. Fintech credit cards establish credit limits with their lending partners and issue prepaid cards backed by these limits. This enables the advancement of lines of credit to the section of the population that would not have access otherwise.
