Payment Cards Market Overview in India

• Publication date: January 2012

The market research report provides statistics on industry size, competitor industry shares and projections . It also provides an overview of regulations, competitor activities, issuer strategy, product innovation, consumer key market segments and includes developments in contactless, mobile, and online payments as well as prepaid cards.Market sizing, projecting and competitor shares are an invaluabl...

The market research report provides statistics on industry size, competitor industry shares and projections . It also provides an overview of regulations, competitor activities, issuer strategy, product innovation, consumer key market segments and includes developments in contactless, mobile, and online payments as well as prepaid cards.Market sizing, projecting and competitor shares are an invaluable guide for any cards player building a business case for activity in India.In-depth insight into contactless, mobile, prepaid and online payments highlights future opportunities for all market stakeholders.Detailed analysis of consumer key market segments allows issuers to target consumers with inside knowledge of their true behavior and needs.An overview of India's regulatory framework allows current and prospective players to understand the environment and its implications.Payment card transactions in India for the year 2010 totaled EUR 191bn, of which pay now cards accounted for EUR 178.7bn or 93.5%. Projections put the growth of the total value through payment cards at a growth rate of 25.7% over 2011–15f.ICICI Bank and HDFC Bank are the two largest players and jointly hold 55% of the credit card industry . Public segment banks are the largest players in India's pay now card industry . The three biggest privately owned banks hold 21.1% of the industry share, whereas foreign-owned banks have the smallest share of the debit card industry .The online payment industry in India stood at only EUR 4.2bn in 2010, largely due to low Internet penetration in the country. Prepaid cards are a new concept in India and as such do not have a very large share in the payment card industry, largely being targeted towards travellers in India.Which card sectors are showing the fastest growth in the Indian payments industry and why?Who are the major competitors in Indian card payments and what is their industry share?What impact will regulators and new industry entrants have on future growth in Indian payments.How extensive are mobile, online, prepaid and contactless payments and where does future growth lie?

Credit Card Industry in India

OVERVIEW
•Catalyst
•Summary
EXECUTIVE SUMMARY
•Sizing and projecting the payment card industry in India
•Competitor and product developments in India
•Indian credit card consumer sectors
•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 industry in India
?Size and performance of the payment card industry
?Trends in payment card use compared to other countries
?Credit card balances outstanding, revolve rates, and repayment behavior
•Forecasting the payment card industry in India
?Forecasting the pay now card industry
?Forecasting the revolving credit card industry
?Forecasting the charge card industry
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 segment banks
?State Bank of India
?Punjab National Bank
•Private segment banks
?ICICI Bank
?HDFC Bank
?Axis Bank
•Card issuer industry shares and performance
?Credit card industry 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 industry players
?Consumer satisfaction by credit card brand
?Pay now card industry shares
?Charge card industry shares
?Citibank has the highest value of transactions in the charge card domain
•Card scheme industry 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 take over d 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 industry 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 sales 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 industry in India was valued at an estimated USD 5.6bn in 2010
?India is the smallest industry 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 USD 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 USD 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

TABLES

•Table: India: macroeconomic indicators
•Table: India: demographics and consumer trends
•Table: Datamonitor’s projection for the pay now card industry, 2009–15f
•Table: Datamonitor’s projection for the credit card industry, 2009–15f
•Table: Datamonitor’s projection for the deferred debit and charge card industry, 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 segment ($m), 2011

FIGURES

•Figure: India is the third largest economy in Asia, 2010
•Figure: The Indian economy grow ed 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 industry, 2010
•Figure: The three largest players occupy two thirds of the credit card industry, 2010
•Figure: HDFC Bank has the highest balance outstanding, 2010
•Figure: Public segment 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 industry in India, 2010
•Figure: Private players dominate the charge card industry in India, 2010
•Figure: Private players dominate the charge card industry in India, 2010
•Figure: Private players dominate the charge card industry 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 industry 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 sector
•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 industry 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 USD 216.5bn opportunity in India
•Figure: Convenience stores offer the biggest opportunity for contactless payments in India

Companies mentionned
Andhra Bank, Atos S.A., Bank of Baroda, Bank of Commerce, Bank of India, BBVA, Canara Bank, Cap Gemini S.A., CMS Energy Corporation, General Mills, Inc., Hutchison 3G UK Limited, Indian Bank, Punjab National Bank, Shanks Group plc, State Bank of Hyderabad, State Bank of Patiala, Sudzucker AG, Syndicate Bank