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Credit Cards are Flourishing – Which & Where

ZET has done a survey which found that credit cards demand is rising in India’s tier 2&3 cities. Fuel cash-back credit cards top the demand, along with travel and e-commerce credit cards – they all saw a higher adoption rate in 2023.

Due to the rising fuel expenses, fuel credit cards have gained popularity in tier 2&3 cities and witnessed a 17% yoy growth in 2023. These cards typically provide cashback, rewards points, or discounts on fuel purchases, making them attractive to a wide range of consumers, including those residing in smaller cities and towns. The top 3 popular fuel cashback cards are BPCL SBI Credit Card, Indian Oil Kotak Credit Card, and IDFC HPCL Credit Card.

The top 10 among tier 2&3 cities for fuel cards are Jaipur, Surat, Indore, Malappuram, Gurgaon, Vadodara, Gautam Buddha Nagar, Kozhikode, Guntur and Thiruvananthapuram. 3 of these 10 cities in are the state of Kerala and 2 are in Gujarat.

With increasing accessibility to travel and growing aspirations for leisure among people in tier 2&3 towns and cities, travel credit cards also gained traction in these regions as well. Demand for travel credit cards grew rapidly in 2023, witnessing a 27% yoy growth as their offerings like air miles, hotel discounts, or travel-related rewards appeal to consumers in India’s hinterland. The increasing connectivity and infrastructure development in these cities also contributed to the rise in travel credit card usage. The appeal of such cards is likely to continue growing. Maximum demand was for SBI IRCTC, Axis Vistara, and IDFC Vistara cards.

The top 10 among tier 2& 3 cities for travel cards are Jaipur, Surat, Chandigarh, Indore, Guntur, Gurgaon, Gautam Buddha Nagar, Bhopal, Vadodara and Lucknow. Among these cities, 2 each are located in the states of Gujarat, Madhya Pradesh and Uttar Pradesh.

The third most popular card among India’s tier 2&3 cities was e-commerce card resulting from increased internet penetration and improved logistics and delivery ecosystem. E-commerce credit cards grew 24% yoy in 2023 on the back of their increased popularity due to specific benefits like rewards, cashback, or discounts on online purchases. These cards are often marketed with tie-ups with major e-commerce platforms, offering exclusive deals and incentives for online shopping. The 3 most popular credit cards were Tata Neu HDFC Credit Card, Swiggy HDFC Credit Card, and Axis Flipkart Credit Card.

The top 10 among tier 2& 3 cities for e-commerce cards are Malappuram, Kozhikode, Gurgaon, Thrissur, Indore, Jaipur, Surat, Kollam, Kannur and Thiruvananthapuram. 6 of these 10 cities in are the state of Kerala.

The study also indicated a 19% yoy growth in New-To-Credit (NTC) consumers with almost 50% of the consumers being under 25 years of age. The most preferred cards for NTC consumers were AU Small Finance Bank Credit Card, SBI Credit Card and Axis Bank Credit Card.

Commenting on the trend, Manish Shara, ZET co-founder & CEO, said: “In India, credit card penetration is low at just 5% of the population but we are witnessing a rise in adoption in the last 2 years. RBI estimates that the number of credit card owners could rise to 100 million by early 2024 from 75 million in April 2022. This rise has been accentuated by factors like increased urbanization, rising disposable incomes, growing aspirations, and the government’s push toward digital transactions. It is encouraging to see that India’s tier 2&3 cities are scripting a new chapter in the growth of credit cards as we drive financial inclusion in newer markets.”

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