India’s credit card usage is expected to grow as integration with the Unified Payments Interface (UPI) expands the use of cards, allowing consumers to make payments through widely accepted UPI QR codes and at merchants without traditional point-of-sale infrastructure, according to a GlobalData report.
The integration of credit cards with UPI is expected to increase utilisation, particularly in ecommerce and higher-value spending, while UPI-powered digital wallets continue to be widely used for day-to-day transactions. Credit cards also offer consumers rewards, discounts and instalment payment options, supporting their adoption.
India had 122.9 million outstanding credit cards as of July, compared with 1.03 billion debit cards, according to the latest Reserve Bank of India data. Debit cards remain the most widely held card type, supported by financial inclusion initiatives and the expansion of formal banking access.
Credit and charge card adoption remains comparatively low because of limited formal credit histories, particularly in rural areas, as well as concerns over interest costs and debt. However, rising incomes, greater awareness and promotional campaigns by banks are supporting increased adoption.
The integration with UPI could widen the range of transactions where credit cards can be used by enabling payments through UPI QR codes, including at merchants that do not accept cards through traditional point-of-sale infrastructure. This could make cards more relevant in areas where conventional card acceptance remains limited.
Riding on e-commerce
Ecommerce expansion is also supporting wider adoption of electronic payments and is expected to contribute to card usage. Credit cards are likely to remain relevant for higher-value spending, where consumers can use credit while accessing rewards, discounts and instalment options.
The expansion of formal financial services is creating a broader base for electronic payment adoption. More than 590 million accounts and over 410 million RuPay cards had been issued under the Pradhan Mantri Jan Dhan Yojana as of August, highlighting the role of bundled debit cards in bringing first-time users into the formal financial system.
The Financial Inclusion Index rose to 70 as of March-end from 67 a year earlier, reflecting continued progress in access to financial services, financial literacy and consumer protection.
Going ahead, credit card utilisation is expected to benefit from wider UPI integration, particularly as UPI provides a broader acceptance network for card-linked payments. Continued ecommerce expansion, rising incomes and greater adoption of credit products could further support card usage, according to the GlobalData report.
