The India debit cards market is growing at a
robust growth rate owing to the increasing trend of online payments mode and
rising platforms which support digital transactions in the country. Furthermore,
emergence of fintech companies, co-branded cards, and various government
initiatives for debit cards companies is significantly contributing to the
India debit cards market growth.
India Debit Cards Market Scope
A debit card is a payment card that is linked
to a checking or savings account at a bank. It allows customers to make
purchases or withdraw cash from an ATM, and the amount is deducted directly
from account balance. Debit cards are a convenient alternative to carrying cash
or writing checks, and they can be used at many merchants and retailers around
the world. They usually have a personal identification number (PIN) that is
used for authorized transactions and for protection against fraud.
Credit cards held a 7% market share of all
the cards in use, while debit cards held 93% of the market. The India debit
cards market is segmented into Visa, Mastercard, RuPay, and Others (Maestro
Card etc.) based on service provider. In India, Visa and Mastercard dominates
the country’s debit card market. The increased value of e-commerce transactions
shows the widespread transition from the physical to the digital world since
the beginning of pandemic.
India Debit Cards Market Overview
The debit cards market in India is witnessing
high demand owing to the changing preference in India towards technologically
derived products and growing government initiatives. According to Worldline,
there were 4120 million debit card transactions worth USD90 billion in
2021, 28.93 million of which were from point of sale and 21.36 million from
e-commerce. Debit card transactions processed at Point of Sale (POS) terminals
reached USD56 billion in value, while those processed online reached USD29 billion.
In addition, the number of households with internet connections is expected to
rise by 46%, from 160 million in 2021 to 233 million by 2026. Thus, with the
rising smartphone and internet penetration, the India debit cards market is expected
to experience a significant growth in the forecasted years.
The growth of the Indian economy has led to
an increase in card usage across the country. Debit cards are becoming more
widely accepted as a payment option, which has further fueled the growth of the
debit card market in India. The increasing adoption of digital payments in
India, government initiatives to promote cashless transactions, and the growing
availability of digital infrastructure and services are key drivers of growth
in the market.
India Debit Cards Market Drivers
The India debit cards market has been growing
steadily over the years, and there are several factors driving this growth. The
Indian government has launched several initiatives to promote cashless
transactions and reduce the use of physical currency. For example, the
government's Digital India campaign aims to provide digital infrastructure and
services to all citizens, including online payment systems. Other initiatives,
such as demonetization in 2016, have also helped to encourage the use of
digital payment methods. Furthermore, increase in the number of debit cards was
also attributed to the issuance of RuPay cards under the Pradhan Mantri
Jan-Dhan Yojana (PMJDY) scheme. More than 68 million debit cards were
issued by the program's launch in 2021. Thus, these initiatives have played a
significant role in driving the growth of the debit card market in India.
India Debit Cards Market Trends
The banking sector is undergoing a digital
transformation with new technologies and partnerships. Banks have been at the
forefront of this shift in terms of payments, leading with a variety of digital
innovations, but the most recent development has seen a rise in demand for
co-branded credit and debit cards. Co-branded debit cards have become popular
in India, with banks partnering with various companies and brands to offer
debit cards with added benefits and rewards. These co-branded cards often come
with cashback offers, discounts, and other rewards that make them more
attractive to customers. For instance, PayPal Mastercard Debit Card is a
co-branded card by Mastercard International and PayPal. It enables customers to make purchases at any
Mastercard-accepting business globally using funds from their online PayPal
accounts. Major companies have already adopted the trend of working with banks
to offer co-branded cards to their clients for ease of payments, including
airlines, hotels, e-commerce, and fuel companies. Overall, the India debit card
market is witnessing several trends, including contactless payments, mobile
banking, co-branded cards, e-commerce partnerships, and enhanced security
features. Thus, these trends are shaping the way customers use their debit
cards and are driving innovation in the Indian financial services industry.
India Debit Cards Market Challenges
Debit cards are popular for online
transactions, but their usage for offline transactions is still limited. This
is due to factors such as the lack of acceptance of debit cards in some retail
outlets and the preference for cash transactions in some parts of the country. Furthermore,
with the increasing risk of fraud and cybercrime, customers are becoming more
concerned about the security of their debit cards. This can lead to a lack of
trust in the debit card industry and make it difficult for banks to attract and
retain customers. While debit cards are a popular payment method in India, they
face competition from other payment methods such as mobile wallets and UPI. For
instance, In December 2022, the UPI registered more than 7.82 billion
transactions costing USD160 billion, according to data released by the National
Payments Corporation of India (NPCI). These payment methods offer a convenient
and secure way to make payments, and their popularity could limit the growth of
the debit card market in India.