India’s credit card industry is on a robust growth trajectory, with projections indicating that the number of credit cards in circulation will double to 200 million by FY2028-29, according to a recent report by PwC. The credit card market has experienced substantial growth in transactional activity, with both transaction volumes and values increasing by 22% and 28%, respectively.
The PwC report highlights that the number of credit cards issued in India has already doubled over the past five years, showcasing a significant expansion in the industry. This growth is anticipated to continue, with a compound annual growth rate (CAGR) of 15% expected to sustain the upward trend in the coming years. The doubling of credit cards over the previous five years is predicted to be mirrored in the next five fiscal years, solidifying the market’s expansion.
In addition to the increase in card issuance, the report notes a marked rise in transactional activity, driven by the introduction of new products, broader customer segments, and innovative offerings. However, the report also points out a shift in consumer behavior, with debit card transactions declining in both volume and value. Debit card transaction volumes saw a 33% decrease, while spending dropped by 18% in FY23-24. This decline is attributed to the rising popularity of Unified Payments Interface (UPI), which offers seamless transactions and has become the preferred payment method for small and medium merchants due to its zero Merchant Discount Rate (MDR).
The report further explains that debit cards are struggling to compete with credit cards, particularly in terms of rewards. Debit cards have not been able to attract customers as effectively as credit cards, partly due to lower awareness of their benefits and the lack of compelling reward programs. Despite these challenges, digital payments in India are thriving, with transaction volumes growing by 42% annually in FY23-24 and expected to quadruple by FY28-29. This growth is driven by new business models, technological advancements, increased customer awareness, and ongoing innovations within the payment ecosystem.
