Co-branded tie-ups, tech drive 17.2% growth in credit card issuance: RBI

The Reserve Bank of India (RBI), in its Benchmarking India’s Payment Systems – Follow-on Exercise Report, says in terms of credit card issuance, India saw a strong compound annual growth rate of 17.2% between 2017 and 2020.

The growth in credit cards can be attributed to innovative products, co-branded partnerships -- like those of non-bank financial companies or fintech companies with banks -- e-commerce, cashback programmes and technology.

According to the RBI, the increase in the number of credit cards is an indication of the expansion of retail borrowers in the ecosystem. Despite the increasing use, the number of credit cards -- in absolute terms -- in India is significantly low as compared to China (778 million) and the United States (1069 million) as of December 2020.

"India, with 886 million debit cards at the end of 2020, was behind only China (8,178 million) in terms of the number of debit cards issued. In terms of the number of credit cards issued, India with 60.4 million credit cards, was behind Brazil, Canada, China, Korea, Turkey and USA," says the RBI report.

Notably, the number of credit and debit cards issued in a country indicates the adoption of card payments.

In India, the debit cards and credit cards issued increased to 0.92 billion and 73.6 million respectively, as of end-March 2022. Apart from credit cars, China is also the leader in debit card issuance, followed by India with 8.1 billion and 0.88 billion debit cards issued, respectively, as of the end of 2020.

India recorded a CAGR of 1% in debit card issuance between 2017 and 2020, despite 150 million debit cards going out of the market due to the planned migration from magnetic strip cards to EMV chip and PIN-based cards in 2019.

However, the overall card payments declined during the period across India. The share of card transactions in overall payment systems transactions in India decreased from 30.6% in 2017 to 14.7% in 2020, says the report. The decline in the share of card transactions in 2020 was attributed to the presence of ubiquitous, interoperable systems facilitating immediate payments such as UPI and lesser use of cards at PoS terminals due to the restrictions in place on account of the CoVID pandemic.

In 2020, the share of card payments in total payment systems transactions was the second-lowest in India at 14.7%, with only Indonesia witnessing a lower share at 7.2%, says the RBI report. In 2020, India was one of the few countries along with Indonesia, Korea, Sweden, Turkey and the United Kingdom to witness a decline in the share of card payments as compared to 2017.

Among the benchmarked countries, card payments dominated payment systems transactions in Canada, Russia, Saudi Arabia and Turkey in volume terms in 2020, says the RBI report.