India’s card payments market is on the cusp of significant growth, expected to surge by 11.3% in 2024 to reach Rs 28.4 trillion (USD 344 billion). This upward trajectory is driven by a growing preference for non-cash payments and government initiatives promoting financial inclusion and electronic payment adoption.
Key Drivers of Growth
Consumer Shift to Non-Cash Payments
- The market experienced a 27.1% increase in card payment value in 2022 due to a rise in consumer spending.
- 2023 continued this trend with a 13.1% growth, bringing the total card payment value to Rs 25.5 trillion (USD 309.2 billion).
Government Initiatives
- Programs like the Pradhan Mantri Jan-Dhan Yojana (PMJDY) have provided low-cost bank accounts and debit cards, especially in rural areas.
- Reduction in merchant service fees has encouraged the shift from cash to card payments.
Expanding Banked Population
- Debit cards remain the most prevalent, but credit and charge cards accounted for 75.7% of the total card payment value in 2023, due to benefits like reward points and installment payment options.
Rise in E-Commerce
- Card payments represented 24.6% of the total e-commerce transaction value in 2023, reflecting broader consumer trends in online shopping.
Regulatory Support
- The Reserve Bank of India (RBI) established the Payments Infrastructure Development Fund (PIDF) in January 2021 to enhance electronic payment acceptance.
- By November 2023, the PIDF initiative had successfully deployed 827,901 POS terminals and 27.2 million QR code acceptance points.
Future Outlook
The card payments market in India is expected to grow at a compound annual growth rate (CAGR) of 11.1% from 2024 to 2028. This growth will be driven by:
- Continued government efforts to promote financial inclusion.
- Improvements in payment infrastructure.
- The expanding e-commerce sector.
India’s card payments market is set for robust growth, backed by supportive government policies and a rising consumer inclination towards digital payments. The initiatives to boost financial inclusion and improve payment infrastructure are paving the way for a cashless economy, making card payments a dominant force in the Indian financial landscape.
What do you think about the future of card payments in India?