It will not be hyperbole if we say that the world is going through the most volatile and, at the same time, the most interesting times. India, too, has experienced an equally dynamic environment yet it has some exciting opportunities lined up to capitalise on. From being one of the fastest-growing major economies in the world to being the next global manufacturing hub, India is steadily unlocking its potential. When it comes to digital payments, the country’s role in spurring tech innovation has ensured its marquee position in the space. The mammoth success of UPI is an undisputable example.
The number of digital transactions in India reached an all-time high in FY23. The total digital transactions stood at 91.92 billion as of December 31, 2022, for FY23. Interestingly, India has varied payment channels that feed its burgeoning digital payments pool, all catering to a highly diversified spectrum of consumers. Among these, credit cards contribute the highest average ticket size and drive a significant value of spending despite their humbler share in transaction volume. However, it is worth remembering that only about 5% of India’s market has been tapped yet, which leaves a lot of room for future growth.
Over the past few years, credit cards have been growing steadily. The card volume grew at 16% CAGR from FY17 to FY22 while spending saw 24% CAGR. As of January 2023, credit cards have crossed 82 million in volume and monthly spending has been above Rs 1 trillion benchmark in the last 11 months. At SBI Card, our growth has been in a similar direction. In Q3 FY23, we added 1.6 million new accounts, the highest ever during a quarter and have already crossed Rs 1.5 trillion in total spending, as of December 2022 for FY23. Several factors have proved conducive to the industry’s growth. Consumers’ acceptance of digital payments, including credit cards, is for sure, one factor. Another major factor is growing infrastructure along with cheaper rates for data, faster internet speed, and increased smartphone penetration.
While these have contributed to overall enablement, there are a few others that have been at play on the consumers’ side which have led to an increased willingness to spend through credit cards. Growing disposable incomes combined with favourable demographics has been a major driver. This, followed by rising usage and stickiness among consumers towards e-commerce, has opened newer avenues.
SBI Card
And as we wonder what is next, the potent combination of tech innovations and favourable polices is going to take this growth to another level. We are already witnessing the transition of physical cards into virtual ones. New-age technologies like Tokenisation, Host Card Emulation (HCE), Artificial Intelligence (AI), Machine Learning (ML) etc. are rapidly changing how consumers use credit cards and have enhanced convenience and security, thus, spurring usage. For example, on SBI Card, we have integrated HCE into our app SBI Card Pay. Apart from this, our digital payments suite also includes Paytm, Samsung Pay, Jio Pay, and Google Pay. So, our customers need not carry their physical cards any more with them. Another example is our AI-powered chatbot service AskILA, which addressed about 6.8 million customer queries just in the month of December 2022.
Favourable policy formulation by the Government and Regulator has an important role to play too. The year 2022 has seen some important changes for the credit card and payment industry. These regulations have laid the growth path for the industry while also putting customer-friendliness and security under the limelight. So, whether it is RBI’s Master Direction on Credit Card and Debit Card – Issuance and Conduct Directions, 2022 or linking of RuPay credit cards with UPI, the road from here for the industry is clearer and the sentiments are positive.
Indeed, the Indian credit card industry has come a long way and we can expect the growth momentum to continue given the potential of this underpenetrated market.
