The credit card market in India is poised for significant growth, with the number of credit cards expected to reach 200 million by 2028-29, according to a recent PwC report. The industry is projected to grow at a Compound Annual Growth Rate (CAGR) of 15%, building on the momentum that has seen the number of credit cards issued double over the past five years.
The report highlights that alongside the increase in credit card issuance, there has been a notable rise in transactional activity. Transaction volumes have increased by 22%, while transaction values have surged by 28%, driven by the introduction of new products, innovative offerings, and the expansion of customer segments.
However, the report also points to a decline in debit card usage, with both transaction volume and value dropping significantly. In FY23-24, debit card transaction volume fell by 33% compared to the previous year, and spending on debit cards decreased by 18% year-on-year. This decline is largely attributed to the growing popularity of the Unified Payments Interface (UPI), which offers ease of use and is favored by small to medium-sized merchants due to its zero Merchant Discount Rate (MDR).
The PwC report notes that debit cards have struggled to compete with credit cards in terms of rewards, further contributing to their decline. The lack of attractive reward programs and lower awareness of existing benefits have made debit cards less appealing to consumers.
Despite the challenges faced by debit cards, digital payments in India continue to thrive, with transactional volume growing by 42% year-on-year in FY23-24. This growth is expected to triple by FY28-29, driven by innovations in the payment ecosystem, new business models, technological advancements, and increasing customer awareness.