Indian Credit Card Industry: A Sneak Peek

Updated on: 15 Jan 2024 // 5 min read // Credit Cards
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The Credit Card penetration in India is too low as compared to developed countries. According to a report published in December 2019, there are approximately 3 Credit Cards for every 100 individuals as compared to the 320 credit cards per 100 individuals in the US. The same report also highlights that presently, Credit Cards account for only 5% of the per capita consumption in India.

However, owing to the recent push towards digital payments and the intentions of the government to move India towards a cashless society, the Indian Credit Card industry has witnessed an impressive y-o-y growth during the last two years. We have indeed seen around 27% growth in the previous year with the number of Credit Cards rising from 38 million to 49 million. With the constant rise in the number of Credit Card providers as well as Credit Card users, it is well expected that the industry will keep showing the rising trend in the coming years as well.

Factors driving Indian Credit Card industry in future

Here are some of the most crucial factors that are playing a prominent role in the growth of the Credit Card industry in India.

Younger customer base: Rising popularity of Credit Cards amongst young users, i.e., Millennials and Generation Z, is a major driving force for the launch of a host of credit cards in India.For instance, till March 2016, only 2% of Credit Card Transactions originated from individuals less than 25 years old, but now this figure stands at 10% in 2019, a five-fold increase in just over 3 years. If the transactions originating from users in the age bracket 26-30 are also added to it, the number climbs up to 35% of the user-base.

In the past few years, we have seen the launch of the Best Credit Cards in India, catering to a diversified customer base. You get attractive cashback offers, surcharge waiver on fuel refuelling, enhanced rewards on online shopping, lifetime freecards, and many more. There is a card available for each type of user-base. For instance, if you are looking for the Lifetime Free SBI Credit Card, you can apply for SBI UnnatiCredit Card and more.

Cashless transactions and digital payments: The newer generation can adapt to technology at a much faster rate than the previous generations.This has indeed helped in more rapid penetration of the Credit Cards among the millennials. As per a news report, the total percentage of millennials who are Credit Card users increased from 19% in 2015 to 35% in 2019. This change in mindset has helped in boosting the acceptance of digital payments by the Indian populace.It has further improved in the expansion of the e-commerce industry in India, which is already working to increase the penetration of Credit Card usage among Indian citizens. People have increased the usage of Credit Cards for making payments for travel, shopping, lifestyle, entertainment, healthcare, utility bills, shopping, etc. which has ultimately increased the usage of Credit Cards in India.

Instant EMIs: One of the first thingsthat come into a person’s mind when they think of a Credit Card is the EMI or Equated Monthly Installments. The EMI facility turns out to be a very big factor and has been helping in driving the growth of the Credit Card industry in India. The availability of instant EMIs on top Credit Cards such as SBI Credit Cards has particularly made online shopping for lifestyle and consumer durable goods a go-to option for the Credit Card users.

Instant cash loans and Personal Loans: The slowdown in the economy has started to show its sign more prominently now, but the threat of the impending slowdown was being anticipated for many months. Now, as the general public is facing a paucity of funds, people are developing an affinity for Credit Cards. As not only do Credit Cards help them complete transactions even if they do not have the money in their account but also offer access to instant cash. Credit Card companies are now offering cash advances as well as instant pre-approved Personal Loans for their customers. The financial flexibility offered by Credit Cards during emergencies is also a big factor in increasing their popularity.

Increased acceptance with merchants: Nowadays, most of the retail chain owners have also moved from cash transactions to online/cashless transactions. The availability of Point-of-Sale machines has only helped in increasing the percentage of the cashless transaction that people make. There has been a large growth in the sale of POS machines at a rate of 29% in the last 5 years to reach around 4 million POS machines in 2019.This highlights the increasing preference of making online payments by Indian customers. With the Government’s push towards digital payments, this number is slated to rise even more in the coming years.

Better safety features: There is better technology at present times, which provides a very good fraud detection facility that was not so easy in the earlier days. There is better fraud detection, and since people can feel more secure while using their Credit Cards, it can be assumed that this will help in increasing the penetration of Credit Cards in India.

Quicker approvals: The process of approval of a Credit Card has grown shorter and faster; thus, people can get a Credit Card quickly as compared to the situation 5 years back. Moreover, there are a lot of attractive offers and benefits associated with each Credit Card, and the companies are working very hard to push their Credit Cards in the market with more & more benefits to lure the end-users.

Until now, India has primarily been a debit-card rich market with a majority of the cardholder population having only debit cards and that too not more than one or two. But the increase in digital payment platforms has helped in increasing not only the debit card penetration but has also helped in increasing the amount of population that uses Credit Cards for their expenditures. Over a million new Credit Cards are being issued every month in India, which shows a very positive sign for the Credit Card industry in the country.

Also Read: Top Credit Cards in India

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