India’s Changing Payment Landscape
In the midst of India’s digital revolution, credit card transactions have emerged as the second most popular mode of payment, trailing only behind the UPI system. Debit card usage, however, has seen sluggish growth. Recent data from Worldline reveals significant shifts in consumer behavior, with credit card transactions experiencing a notable uptick while debit card usage declines.
Rise of Credit Card Transactions
Between June and December 2023, credit card transactions surged by 11%, reaching 1.78 billion transactions. This marks a substantial 21% increase compared to the same period in 2022. The total value of credit card transactions during this time amounted to ₹9.29 trillion, an 11% rise from the previous year.
Decline in Debit Card Usage
Conversely, debit card transactions witnessed a significant decline, dropping by 34% to 1.15 billion transactions in the second half of 2023. The total value of debit card transactions stood at ₹3.02 trillion, indicating a 16% decrease from the previous year.
Drivers of Credit Card Growth
Despite the growing dominance of the UPI system, credit card spending has been bolstered by increased consumer expenditure on higher-value goods and services across India. This trend underscores a shift towards credit card usage, especially for larger transactions.
Issuance Trends
In December 2023, a total of 97.9 million credit cards and 960.8 million debit cards were in circulation. Private sector banks accounted for 71% of credit card issuances, while public sector banks issued 24%. For debit cards, government-backed banks issued 65%, with private lenders issuing the remaining 24%.
UPI Continues to Thrive
The UPI system remains a ubiquitous choice for digital transactions in India. Transaction volumes surged to 65.77 billion between June and December 2023, up from 42.09 billion in the same period in 2022. The total transaction value also increased by 44% to ₹99.68 trillion during the second half of 2023.
Key Players in UPI
Leading UPI platforms such as PhonePe, Google Pay, and Paytm continue to dominate the market, collectively accounting for 95.4% of all transactions. This further solidifies their position as primary facilitators of digital payments in India.
Mobile Payments on the Rise
Mobile payments, facilitated by smartphone apps, have witnessed significant growth. Transaction volumes reached 62.95 billion between June and December 2023, compared to 45.58 billion in the same period in 2022. The total value of mobile transactions in the second half of 2023 amounted to ₹152.33 trillion.
Insights from Worldline CEO
Ramesh Narasimhan, CEO of Worldline, emphasizes the continued dominance of UPI and the rapid expansion of mobile transactions. This shift underscores users’ increasing confidence in smartphone-based payment methods and highlights the importance for FinTech companies to adapt to evolving payment channels.
In summary, India’s payment landscape is undergoing a significant transformation, with credit cards gaining momentum, UPI maintaining its dominance, and mobile payments experiencing robust growth. These trends reflect changing consumer preferences and the evolving digital economy in India.
