In 2023, India witnessed a remarkable surge in the demand for credit cards, as revealed by a comprehensive report from ZET, a leading fintech platform in the country. The year-over-year growth in key sectors such as travel, e-commerce, and fuel reached impressive figures of 27%, 24%, and 17%, respectively. Notably, the rise of New-To-Credit (NTC) consumers by 19% indicates a growing acceptance and accessibility of credit services in the Indian market.
Despite the substantial growth, the credit card penetration rate remains relatively low, standing at just 5% of the population. This suggests a vast untapped market, signaling potential for further expansion in the coming years. The newfound popularity of credit cards is not limited to metropolitan areas but extends to Tier-II and III towns and cities. The convenience and accessibility offered by credit cards are proving to be catalysts for this shift in consumer behavior.
One of the noteworthy trends identified in the report is the increasing demand for credit cards in India’s Tier-II and III towns and cities. The convenience of cashless transactions, coupled with the financial flexibility provided by credit cards, has played a pivotal role in attracting consumers in these regions. This shift signifies a broader financial inclusion, empowering individuals in smaller cities to embrace digital payment solutions.
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ZET’s report highlights the emergence of specialized credit cards that cater to specific consumer needs. Travel credit cards, with a staggering 27% YoY growth, are gaining popularity among those with a penchant for exploration. E-commerce credit cards, witnessing a 24% growth, reflect the evolving shopping habits of Indian consumers. Additionally, fuel cashback credit cards, experiencing a 17% increase in demand, showcase the practical appeal of financial incentives tied to daily expenses.
The rise of NTC consumers by 19% is a pivotal factor in the credit card boom. As more individuals enter the formal credit ecosystem for the first time, financial institutions and fintech platforms have an opportunity to shape and influence their long-term financial habits. This influx of new consumers contributes not only to the growth of the credit card market but also to the overall financial inclusion objectives.
India’s credit card landscape is undergoing a transformative period, marked by significant growth and evolving consumer preferences. The ZET report underscores the pivotal role played by credit cards in Tier-II and III towns, signaling a broader financial evolution. As specialized credit cards continue to gain traction, and the NTC segment expands, the Indian credit market is poised for continued growth and increased financial inclusion in the years ahead.