India’s card payments market set to surge 11.3 pc in 2024, reaching Rs 28.4 tn: GlobalData

New Delhi [India], July 24 (ANI): India’s card payments market is poised for substantial growth in 2024, with a forecasted increase of 11.3 per cent to reach Rs 28.4 trillion (USD 344 billion), according to GlobalData, a data and analytics company.

This growth is attributed to a rising consumer preference for non-cash payments and supportive government initiatives aimed at boosting financial inclusion and electronic payment adoption.

GlobalData’s Payment Cards Analytics reveals an upward trend in card payments in India. The market saw a remarkable 27.1 per cent increase in card payment value in 2022, fueled by a surge in consumer spending.

This upward continued into 2023, with a 13.1 per cent growth, bringing the total card payment value to Rs 25.5 trillion (USD 309.2 billion).

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, emphasized the role of declining cash usage and rising consumer confidence in electronic payments.

Sharma said, “India’s card payments market continues to grow as cash usage declines. The government’s initiatives, along with the increasing consumer confidence in electronic payments, have paved the way for the growth of card payments in the country.”

“Backed by the government push to promote financial inclusion and electronic payments – which includes the launch of low-cost bank accounts and debit cards under the Pradhan Mantri Jan-Dhan Yojana (PMJDY) program and reduction in merchant service fees – consumers are gradually shifting from cash to card-based payments,” he noted.

The Indian government’s push for financial inclusion, notably through the Pradhan Mantri Jan-Dhan Yojana (PMJDY) program, has significantly contributed to this growth.

The program aims to provide low-cost bank accounts and debit cards, particularly targeting the rural population. Alongside, reductions in merchant service fees have further encouraged the shift from cash to card-based transactions.

Debit cards remain the most prevalent type of card in India, driven by the expanding banked population. However, credit and charge cards accounted for a substantial 75.7 per cent of the total card payment value in 2023.

The popularity of these cards is largely due to benefits such as reward points, discounts, and installment payment options.

The rise in e-commerce has also played a crucial role in the growth of card payments. Payment cards, including debit, credit, and charge cards, collectively represented 24.6 per cent of the total e-commerce transaction value in 2023, according to GlobalData’s 2023 Financial Services Consumer Survey.

This growing preference for card payments is reflective of broader consumer trends in online shopping.

To support the expansion of electronic payments, the Reserve Bank of India (RBI) established the Payments Infrastructure Development Fund (PIDF) in January 2021.

The fund aims to deploy one million Point of Sale (POS) devices and enhance QR code payment acceptance across merchants. By November 2023, the initiative had successfully deployed 827,901 POS terminals and 27.2 million QR code acceptance points.

The program, initially set to end in 2023, has been extended to December 2025.

Looking ahead, the outlook for India’s card payments market remains highly optimistic. The market is projected to register a strong compound annual growth rate (CAGR) of 11.1 per cent from 2024 to 2028. Key drivers of this growth include ongoing government efforts to promote financial inclusion and electronic payments, improvements in payment infrastructure, and the expanding e-commerce sector.

Sharma concluded, “Looking ahead, the forecast for the total card payments market in India is promising. The market is expected to experience significant growth over the forecast period, driven by factors such as the government’s push for financial inclusion and electronic payments, improvement in payment infrastructure, and the growth of e-commerce.”

He added, “Overall, the card payments value is expected to register a strong compound annual growth rate (CAGR) of 11.1 per cent between 2024 and 2028.”