India’s card payments market is set to grow at a compound annual growth rate (CAGR) of 18.7% between 2022 and 2026 to reach INR43.3 trillion ($581.2 billion) in 2026, driven by consumers’ increasing preference for electronic payments, improvement in payment infrastructure, and constant efforts by financial authorities to boost cashless payments, forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Card Analytics, card payments value in India is estimated to have registered a robust growth of 26.7% in 2022 driven by recovery in economic conditions and post-pandemic rise in consumer spending.

Kartik Challa, Senior Banking and Payments Analyst at GlobalData, comments: “India has traditionally been a cash-driven economy. However, the country has seen increased usage of electronic payments in past few years, supported by constant government push, and improving payments infrastructure. The government is pushing financial inclusion with initiatives such as launch of low-cost bank accounts and debit cards.”

In January 2021, the Reserve Bank of India (RBI) set up Payments Infrastructure Development Fund (PIDF) to expand payment infrastructure by offering subsidy to merchants on installation of POS terminals and QR codes. Contribution to the PIDF is made by the RBI, card schemes and banks. As part of this initiative, merchants in tier 3–6 towns received 30–50% subsidy on POS terminals and 50–75% subsidy for QR code. By June 2022, over 411,000 POS terminals and 11.4 million QR code acceptance points were deployed using funds from PIDF.

Indian government’s move to abolish merchant service fees on state-owned RuPay cards from January 1, 2020, encouraged merchants to accept cards, thereby contributing to growth in card payments.

Despite having lower penetration, credit and charge cards are preferred over debit card for payments by consumers in India. Credit and charge card penetration in India is a low at 6.3 cards per 100 individuals in 2022, compared to 71.7 for debit cards. However, credit and charge cards account for 63.2% of card payments by value in 2022, while debit cards account for the remaining 36.8% share.

Challa concludes: “Going forward, increased financial inclusion, rising consumer awareness and expansion of POS infrastructure will all boost card usage in the country.”