The Indian payments industry has seen a sea change in recent years in terms of adoption of digitized technologies and innovations that process transactions within seconds. As we move to a more digital world, the role of credit cards becomes even more important in facilitating online payments. The demand for online payments is constantly growing and service providers are constantly innovating to offer rewarding services to their users.
The use and issuance of credit cards in India has been on the rise, with credit card spending crossing the Rs 1 trillion mark for the first time in years. Credit card issuance has also grown significantly in India at a compound annual growth rate (CAGR) of 20% over the past four years. With attractive rewards for users, while making payments, customers are more and more inclined to use credit cards to make payments related to their daily needs, shopping, travel, etc. This has required increased partnerships between banks and fintechs to meet the growing demands of their customers and issue them cards that deliver exceptional consumer experiences.
Trends in the credit card industry
Although credit cards have been around in India for a long time now, the industry has embarked on an upward trajectory with transactions worth over Rs 877 billion processed in the month of January 2022 alone. several underlying trends that are giving such a boost to this industry.
- Contactless payments: The need for contactless payments has spiked, especially due to the pandemic, leading to increased demand for contactless payments. This in turn led to an increase in the issuance of credit and debit cards in the country. Moreover, the growing demand for payments through portable devices is also boosting the credit card industry.
- Buy now, pay later: Many fintech players now offer buy-now, pay-later solutions that allow consumers to split their purchase into multiple payments. Consumers can use a BNPL card to make interest-free installment payments on any purchase. This convenience of the payment method also encourages them to choose credit options for their payments rather than other payment methods.
- Rewarding experience: Many consumers are switching to using credit cards to take advantage of the rewards and cashback benefits these cards offer. Today, rewards are standard on many credit cards in the form of co-branded cards, giving cardholders a reason to use them long term.
- Travel maps: Credit card issuers offer several incentives to credit card holders in the form of airport lounge access, travel insurance, redeemable travel points, and more. This makes users opt for credit cards in order to avail these benefits.
- Fintech Disruption: A number of fintechs and new-age banks have emerged and are shaking up the credit card industry by partnering with banks and providing the best services to consumers.
In the age of speed and convenience, online payments are here to stay. With secure and fast payment processing, consumers rely heavily on cards to make payments for their daily needs. Credit cards are also dominating the payments space with more and more innovative features being added to them so that consumers can get the most out of the instrument besides using it only to make payments. With the above trends, the industry is getting a boost as banks see an increase in customers applying for credit cards through them to gain access to the multiple rewards available to them.
The opinions expressed above are those of the author.
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