The convenience and accessibility of using credit cards are rising in India’s tier-II and -III towns and cities with fuel cash-back credit cards being in top maximum demand along with travel and e-commerce credit cards that saw a higher adoption rate in 2023, the latest consumer study by Zet, a fintech platform, has revealed.
According to the study, fuel credit cards have gained popularity in tier-II and -III cities and remained in maximum demand witnessing a 17 per cent YOY growth in 2023 due to the rising fuel expenses. These cards provide cashback, reward points, or discounts on fuel purchases, making them attractive to a wide range of consumers, including those residing in smaller cities and towns. The three most popular fuel cashback cards were BPCL SBI Credit Card, Indian Oil Kotak Credit Card and IDFC HPCL Credit Card.
Further, the study stated that travel credit cards also gained traction in tier-II and -III towns and cities. Demand for travel credit cards grew the fastest in 2023, witnessing a 27 per cent YOY growth as their offerings like air miles, hotel discounts, or travel-related rewards, are increasingly getting popular among 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 third most popular card, as per the study, among India’s tier-II and -III cities was e-commerce due to increased internet penetration and improved logistics and delivery ecosystem. The demand for e-commerce cards in 2023 saw a 24 per cent YOY rise 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 three most popular credit cards were Tata Neu HDFC Credit Card, Swiggy HDFC Credit Card and Axis Flipkart Credit Card.
Commenting on the trend, Manish Shara, Co-Founder and CEO, ZET, said, “In India, credit card penetration is low at just five per cent of the population, but we are witnessing a rise in adoption in the last two years, and as per RBI’s estimates, the number of credit card owners could rise to 10 crore by early 2024 from 7.5 crore in April 2022. This rise in adoption has been accentuated by factors like increased urbanisation, rising disposable incomes, growing aspirations and the government’s push towards digital transactions. It is encouraging to see that India’s tier-II and -III cities are scripting a new chapter in the growth of credit cards as we drive financial inclusion in newer markets.”
The study also suggested that there was a 19 per cent YOY growth in New-To-Credit (NTC) consumers with almost 50 per cent of the consumers being less than 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.
The cities included in the survey are Jaipur, Surat, Indore, Malappuram, Gurugram, Vadodara, Gautam Buddha Nagar, Kozhikode, Guntur, Thiruvananthapuram, Lucknow, Chandigarh, Bhopal, Thrissur, Kollam and Kannur.