India: Credit cards shine even as UPI system soars

Revealing data and forecasts in latest report on world's most valuable cards and payments opportunity

Billed values on credit cards are set to grow by over 45 percent this year, according to a report on India's cards and digital payments market from Argus Advisory Research (AAR). Although card-present is forecast to expand by almost a quarter in that period, the biggest growth is happening online: by year end the market should be worth over $112 billion, a 61.2 percent rise over the previous year, itself a bumper year which saw some 60 percent growth on that metric.

As the chart shows, India stands alone among major markets in terms of its compound annual growth rate of credit card spend over the 2016-21 period. At over 24 percent, spend is booming; the bubble size indicates however that spend remains far below what one would expect for a population of this size. With a savvy populace keen to improve its creditworthiness and a seasoned industry that is increasingly adept at co-branding with tech and electronics brands, this market seems set fair for a period of profitable expansion

"Even if India's credit cards market reached half the penetration levels seen in China and Brazil, the profit pool expansion would be simply enormous", notes David Hickey, senior research analyst at Argus Advisory Research. "It should also not be forgotten that the country is on target to become the world's most populous by the end of this decade."

UPI's stratospheric growth no threat to credit cards

Thanks to the successful mass adoption of the Unified Payments Interface (UPI), now in its seventh year of operation and serving over half a billion people, the value of mobile proximity payments is on course to reach almost 80 percent of overall card purchase volume during 2023. For the month just ended, administrators reported that six billion transactions took place: AAR projects that 2022 will see almost $220 billion in offline UPI merchant payments, a 150 percent rise over 2021. With 59 smartphones per 100 inhabitants and a similar proportion using the internet, the potential of this vast digital payments market is truly historic.

However, "credit cards should not be overly adversely affected by this surge in UPI usage", concludes the new AAR report, which features in-depth profiles of the major players on the platform (Paytm, PhonePe, Google Pay, Amazon, Ola Money and WhatsApp Pay) along with projections to 2025 for both mobile proximity payments and mobile P2P payments. "This is because, compared to the average debit cardholder, the usage needs and wants typical of a credit cardholder are much more difficult to satisfy via UPI. Conversely, nearly all of the advantages available to debit cardholders are also available using UPI."

Argus Advisory Research's reportis one of many individual country reports, each with unique profit pool metrics and analysis. Leveraging data reaching back to 2010 – and forecasts up to 2025 – this extensive data set offers between 200 and 250 metrics for each market. Featuring appendices that set out the market positions of the leading issuers and acquirers, the publication comes with detailed data tables as well as informative and carefully compiled charts.

Each AAR market report takes a consistent approach, with clear-sighted commentary and in-depth data providing comparable insight across markets. The India country report is available for subscribers to download now, or to order online.

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