Table of Contents
OVERVIEW
Catalyst
Summary
EXECUTIVE SUMMARY
Sizing and forecasting the payment card market in India
Competitor and product developments in India
Indian credit card consumer segments
Online, contactless, prepaid, and mobile payments
SIZING AND FORECASTING THE PAYMENT CARD MARKET IN INDIA
Key macroeconomic and consumer data
Macroeconomic trends and performance
Demographic and consumer trends
Sizing the payment card market in India
Size and performance of the payment card market
Trends in payment card use compared to other countries
Credit card balances outstanding, revolve rates, and repayment behavior
Forecasting the payment card market in India
Forecasting the pay now card market
Forecasting the revolving credit card market
Forecasting the charge card market
COMPETITOR AND PRODUCT DEVELOPMENTS IN INDIA
Overview
The competitive landscape
There are two types of payment card issuers in India
Nationalized banks
Private commercial banks and foreign banks
Key competitors
Public sector banks
State Bank of India
Punjab National Bank
Private sector banks
ICICI Bank
HDFC Bank
Axis Bank
Card issuer market shares and performance
Credit card market shares
Credit card branding and usage
Frequency of use by brand
Credit card product features
Leading revolving credit products and price points
Leading loyalty programs
Alliances and partnerships among consumer credit companies
Consumer satisfaction by credit card brand
Pay now card market shares
Charge card market shares
Citibank has the highest value of transactions in the charge card domain
Card scheme market shares and developments
Major card scheme developments
Pay now card scheme shares
Revolving credit card scheme shares
Charge card scheme shares
REGULATORY AND ACQUIRING ENVIRONMENT
Regulatory structure and key bodies
The launch of RuPay will increase the penetration of cards in India
Key institutions and players
Industry regulators: ReserveBank of India
Industry associations: Indian Banks' Association
Other institutions: National Payments Corporation of India
Acquiring and processing landscape
Overview
ICICI Bank and First Data have entered into an alliance called ICICI Merchant Services
Atos Origin acquired Venture Infotek in 2010
Visa and MasterCard develop an electronic payments solution for Aadhaar holders
INDIAN CREDIT CARD CONSUMER SEGMENTS
Overview
Understanding consumer profiles provides opportunities for issuers to gain market share
Datamonitor has defined two Indian credit card profiles
Over a third of Indian credit card users revolve their balances
Attracting new consumers should not be a major challenge for issuers as almost one third of credit card holders are likely to change cards
Around 35% of credit card holders are likely to change their card
More than 80% of card holders are unlikely to switch because the card meets their needs
Issuers are most likely to attract new consumers by offering cards with low interest rates
Traditional distribution channels such as branches and shops are decreasing in popularity, in favor of online and post
Online credit card applications are the second most preferred mode
Both revolvers and transactors are undersupplied in terms of low interest rate credit cards
Attracting a greater number of consumers can be achieved by offering low interest rate cards
Most transactors want low interest rate cards, while only 14% currently have one
Almost 50% of revolvers want low interest rate cards, while only 15% have one
ONLINE, CONTACTLESS, PREPAID, AND MOBILE PAYMENTS
Overview
The online payment market in India was valued at an estimated $5.6bn in 2010
India is the smallest market in terms of potential value
The average online spend per person is lowest in India
In India credit cards account for the largest share of online transactions, in line with global trends
The value of online payments made with debit cards in India is below the global average
Mobile remains at an early stage of development
Citigroup has undertaken high-profile trials of NFC in India
The Interbank Mobile Payment Service has been launched by all major Indian banks
In 2011 Monitise launched its first mobile money application for Standard Chartered in India
State Bank of India entered into a joint venture with Bharti Airtel in 2011
Prepaid is a new concept in India with scope for growth
ReserveBank of India classes prepaid under four categories
Recent developments
Axis Bank achieves $1bn (€754.8m) in total value loaded onto Visa Travel prepaid cards
Citibank, in association with Visa, launches the Platinum Travel Prepaid Card
ICICI launches the ICICI American Express Prepaid Travel Card
Axis Bank announces the launch of a prepaid Visa card
Contactless payments represent a $216.5bn opportunity in India
India offers the third largest opportunity in Asia Pacific
Convenience stores offers the biggest opportunity for contactless payments
APPENDIX
Supplementary data
Definitions
Credit card
Card verification value
Debit card
Point of sale (POS) terminal
Prepaid card
Stored value card
Zero liability
Methodology
Further reading
Ask the analyst
Disclaimer
List of Tables
Table: India: macroeconomic indicators
Table: India: demographics and consumer trends
Table: Datamonitor’s forecast for the pay now card market, 2009–15f
Table: Datamonitor’s forecast for the credit card market, 2009–15f
Table: Datamonitor’s forecast for the deferred debit and charge card market, 2009–15f
Table: Fees and APRs applicable to revolving credit cards in India
Table: Features that customers who are likely to switch look for in a credit card 2011
Table: What Indian consumers have and want, 2011
Table: Satisfaction levels in Indian credit card providers, 2011
Table: Method of credit card application in India, 2006–11
Table: Proportion of online credit card applications by age, 2006–11
Table: Online payments in India by merchant sector ($m), 2011
List of Figures
Figure: India is the third largest economy in Asia, 2010
Figure: The Indian economy expanded by 10.3% in 2010
Figure: PFCE and POS transaction values in India show similar trends
Figure: India has one of the highest unemployment rates in Asia Pacific
Figure: India has the lowest payment card penetration rate among the Asia Pacific countries compared by Datamonitor, 2010
Figure: India had the lowest pay now card penetration in 2010
Figure: India has the second highest growth in pay now card penetration rates, 2005–10
Figure: India had the lowest pay later card penetration rate in 2010
Figure: Pay now cards account for the highest share among all categories of cards
Figure: Pay now cards accounted for the highest number of transactions during 2005–10
Figure: ATM transactions are far more common than POS transactions
Figure: Motor fuel accounts for the largest share of spending through pay now cards in India
Figure: Pay now cards were more frequently used than pay later cards during 2005–10
Figure: Frequency of use at ATMs is much higher than at the POS, and is increasing
Figure: Pay now cards account for the highest value of transactions in India
Figure: The value of ATM transactions was more than nine times the value of transactions at the POS in 2010
Figure: Airline and hotel bookings accounted for the highest spend in both the pay now and pay later categories
Figure: Average transaction values were similar across all three card categories
Figure: The average value of transactions in India is higher at ATMs than at the POS
Figure: India has the second lowest average value of pay now transactions at the POS
Figure: India has the second lowest turnover per pay now card
Figure: Asian countries exhibit a huge disparity in the average transaction value of pay later cards at the POS
Figure: India has the lowest average turnover per pay later card
Figure: Airline and hotel bookings account for the highest share of pay later transaction values In Asia
Figure: 47% of cards are considered primary by consumers in India
Figure: Among Asian countries, India has the highest proportion of cards that are used all the time
Figure: The revolve rate per outstanding balance is highest in India
Figure: 60% of Indian customers pay off their balances in full
Figure: The number of ATM terminals in India increased by 12% over the period 2005–10
Figure: The number of POS terminals recorded a CAGR of 11.5% over 2005–10
Figure: The pay now value of transactions is expected to record a CAGR of around 26% during 2010–15f
Figure: The total number of credit cards is expected to grow at a CAGR of 10% during 2011f–15f
Figure: The number of transactions for charge and deferred debit cards is expected to grow at a CAGR of 8% during 2011f–15f
Figure: The three largest players occupy more than a quarter of the credit card market, 2010
Figure: The three largest players occupy two thirds of the credit card market, 2010
Figure: HDFC Bank has the highest balance outstanding, 2010
Figure: Public sector banks have a higher proportion of platinum cards in their portfolios
Figure: 61% of Citibank cards are used as primary cards by consumers
Figure: 56% of Citibank card users state that they use the card all the time
Figure: Cashback, rewards, and loyalty and discounts are important credit cards features in India
Figure: Customers of foreign banks are most likely to be very satisfied with customer service
Figure: Satisfaction in terms of product offerings is high among the customers of foreign banks
Figure: Customers of foreign banks are least likely to recommend their latest credit card
Figure: Smaller players occupy almost a quarter of the pay now card market in India, 2010
Figure: Private players dominate the charge card market in India, 2010
Figure: Private players dominate the charge card market in India, 2010
Figure: Private players dominate the charge card market in India, 2010
Figure: Visa is the largest pay now card scheme in India, 2010
Figure: Visa accounts for almost two thirds of Indian pay now transaction values, 2010
Figure: Accounting for 60% of branded credit cards, Visa dominates the credit card space in India, 2010
Figure: Visa accounts for 55% of the credit card transaction value in India, 2010
Figure: Visa, the largest player, registered a decline in market share during 2005–10
Figure: Visa accounts for the largest value of charge and deferred debit card transactions
Figure: 35% of credit card holders in India revolve their balances
Figure: The proportion of credit card holders decreases with increasing card holding
Figure: Almost a third of credit card holders are likely to change their card in the next six months
Figure: A total of 80% of consumers are unlikely to change cards, as their needs are currently being met
Figure: Of the revolvers likely to change, almost 80% stated a low interest rate as a motivating factor
Figure: The online channel is now more than twice as popular as it was in 2006
Figure: Online applications are the second most popular mode of applying for a credit card
Figure: There is demand for low interest rate cards in the high spending transactor segment
Figure: There is a huge supply-demand gap for cards with low interest rates
Figure: Institutions need to fill the gap between the demand and supply of low interest rate cards
Figure: Flights and hotels are the biggest online market in India, 2010
Figure: Average online spend per person per year is lowest in India
Figure: Credit cards are the most popular method of transacting online in India
Figure: India has the fifth lowest proportion of online spending through credit cards
Figure: India has the seventh smallest proportion of online spending through debit cards
Figure: Contactless payments represent a $216.5bn opportunity in India
Figure: Convenience stores offer the biggest opportunity for contactless payments in India