A new report from PwC predicts that India’s credit card market will double in size, with the total number of credit cards expected to hit 200 million by FY28-29. The industry is projected to grow at a compound annual growth rate (CAGR) of 15 percent, reflecting its rapid expansion.

According to the report, the credit card sector has already seen impressive growth, with the number of credit cards issued doubling over the past five years. This positive trend is forecasted to continue, with similar growth anticipated in the coming years.

“The credit card market in India is on track to double its card count by FY28-29, reaching 200 million cards. The sector, which has seen a 100 percent increase in issued cards over the last five years, is expected to follow this growth trajectory in the near future”, the report states.

In addition to increased card issuance, the report notes a significant rise in transaction activity. Credit card transaction volumes have grown by 22 percent, and transaction values have surged by 28 percent. This growth is attributed to new product launches, innovative solutions, and expanded customer segments.

Conversely, the report highlights a decline in debit card usage. Transactions using debit cards have decreased in both volume and value, reflecting a shift in consumer habits. Debit card transaction volumes fell by 33 percent in FY23-24 compared to the previous year, while spending dropped by 18 percent.

“Debit card usage has seen limited growth in terms of both the number of cards issued and transaction volumes and values, with a notable decline in FY23-24,” the report indicates.

The report attributes the decline in debit card use to the rising popularity of the Unified Payments Interface (UPI), which is favored for its ease of use and is preferred by small to medium-sized merchants due to its zero Merchant Discount Rate (MDR).

“This reduction in debit card usage can be linked to the growing preference for UPI, which is more convenient and attracts small to medium merchants due to its zero MDR”, the report notes.

Additionally, the report observes that debit cards struggle to compete with credit cards in terms of rewards. The lack of appealing reward programs and lower consumer awareness of existing benefits have made debit cards less attractive compared to credit cards.

On the other hand, digital payments in India are thriving, with transaction volumes rising by 42 percent year-on-year in FY23-24. This trend is expected to accelerate, with digital payments projected to triple by FY28-29.

The report attributes this growth in digital payments to innovations within the payment ecosystem, new business models, technological advancements, and increasing customer awareness.