Card payments in India are likely to hit the Rs 27.9 trillion mark in 2023, up 28.6% year-on-year (YoY), suggests a recent report by GlobalData, a London-based leading data and analytics company.
Card payments' value in India, GlobalData said, registered a robust growth of 26.2% in 2022, driven by economic growth, consumers’ increasing preference for electronic payments, and efforts by financial authorities to boost cashless payments. This, GlobalData said, is likely to continue in 2023 and beyond as well.
Loyalty and reward programs
Loyalty and reward programs have played a significant role in boosting the shift from cash to card payments, particularly following the Covid-19 pandemic. A strong recovery in card payments, driven primarily by credit and charge cards, witnessed remarkable growth rates of 53.0% in 2021 and 46.7% in 2022.
This surge can be attributed to increased consumer spending on areas like travel, lodging, dining, and transportation. The growth of credit and charge cards is further propelled by the allure of loyalty programs and rewards, including discounts and convenient installment options. Forecasts for 2023 also predict a continued upward trajectory for credit and charge card payments, with a projected growth rate of 38.1%.
In contrast, debit card payments are anticipated to experience a more moderate growth rate of 9.5% during the same period.
This expansion in card-based payments is additionally fueled by governmental efforts to enhance electronic payment infrastructure. In January 2021, the Reserve Bank of India (RBI) established the Payments Infrastructure Development Fund (PIDF) to facilitate the expansion of payment infrastructure. Contributions to this fund originate from the RBI, card networks, and banks. The fund aims to provide subsidies to merchants for the installation of point-of-sale (POS) terminals and QR codes.
Following the RBI's directive in June 2022, merchants became eligible for subsidies ranging from 60% to 75% for the cost of POS terminal installations and 75% to 90% for QR codes. By December 2022, the country had successfully deployed over 480,000 POS terminals and 18.3 million QR code acceptance points, all made possible through funding from the PIDF.