India’s credit card market set to double by 2029, reaching 200 million cards

The number of credit cards in India is projected to reach 200 million by FY28-29, growing at a compound annual growth rate (CAGR) of 15%, according to a report by PwC. The report highlights the significant expansion of the credit card industry, which has doubled the number of cards issued over the past five years. This strong momentum is expected to continue, with the market poised to replicate this growth in the coming years.

The report states, "The credit card market in India is expected to double its cards in force by FY28-29, reaching 200 million cards. The industry, which has seen a 100% increase in issued cards over the past five years, is anticipated to replicate this growth within the next five financial years."

In addition to the increase in the number of credit cards, the report notes a substantial rise in transactional activity within the industry. Transaction volumes have grown by 22%, while the value of transactions has surged by 28%. The report attributes this growth to the introduction of new products, innovative offerings, and the expansion of customer segments, which have collectively driven the adoption and usage of credit cards.

However, the report also highlights a decline in debit card usage. Debit card transactions have decreased both in volume and value, reflecting a shift in consumer preferences. In FY23-24, the volume of debit card transactions dropped by 33% compared to the previous year, and spending on debit cards decreased by 18% year-on-year.

"The growth of debit cards in the country has been muted in terms of the number of cards issued, and the volume and value of debit card transactions took a significant hit during FY23-24," the report noted.

This decline is largely attributed to the rising popularity of the Unified Payments Interface (UPI), which has become the preferred payment method for small to medium merchants due to its ease of use and zero Merchant Discount Rate (MDR). The report states, "This decline can be attributed to the inclination towards UPI, driven by its ease of use and the push from small to medium merchants who favour UPI due to 0% MDR."

Furthermore, the report points out that debit cards have struggled to compete with credit cards in terms of rewards, which has further contributed to their decline. The lack of attractive reward programs and lower awareness of existing benefits have made debit cards less appealing to consumers.

Meanwhile, digital payments in India continue to flourish, with transactional volume growing by 42% year-on-year in FY23-24. This trend is expected to triple by FY28-29. The report indicates that the ongoing growth in digital payments is driven by various factors, including innovations by payment ecosystem participants, new business models, technological advancements, and increasing customer awareness.