Popularity of Online Credit Card Services in India: 7 Key Reasons

The Rise of Online Credit Card Services in India: Convenience, Rewards, and Financial Empowerment

The credit card landscape in India has undergone a significant transformation, with online credit card issuers revolutionising the way people access and utilise this financial tool. As of January 2024, the number of active credit card users in India has reached a remarkable 10 crores, underscoring the growing importance of credit cards as an essential component of personal finance.

Factors Driving the Growth of Online Credit Card Services

1. Instant Pre-Approved Credit

The pandemic has heightened awareness of the need for alternative funding sources in times of emergency. Credit cards offer instant access to credit based on individual financial capacity, making them a more reliable option compared to personal or business loans. This feature is particularly beneficial for businesses, freelancers, and self-employed individuals who require quick access to funds for their operations.

2. Unified Payments Interface (UPI) Integration

The rise of online shopping, food delivery, and grocery services has made credit cards the preferred payment method for a significant portion of transactions, with 75% of credit card transactions occurring through online platforms. The integration of credit cards with the Unified Payments Interface (UPI) has further enhanced the convenience and security of online payments.

3. EMI Facility

Credit cards offer consumers the ability to increase their purchasing power by allowing them to convert purchases into affordable EMIs (equated monthly installments). This feature enables customers to pay for products in multiple installments, choosing a tenure that suits their budget. While some issuers may charge fixed credit card interest rates for this facility, the growing popularity of no-cost EMIs has made credit cards an attractive alternative payment option for big-ticket expenses.

4. Quick Onboarding Process

Online credit card application processes have become streamlined, allowing customers to apply digitally with minimal information, submit KYC details, and track their application status with ease. This convenience aligns with the preferences of modern users, who value the simplicity of digital application processes.

5. Co-Branded Partnerships

Credit card issuers often collaborate with other brands to offer exclusive offers and benefits to their customers, including discounts and rewards on travel, online shopping, dining, entertainment, and other services. These partnerships provide added value to credit card users, making them more inclined to opt for credit cards as their preferred payment method.

6. Discounts and Rewards Programs

Credit cards offer attractive discounts and reward programs that incentivise customers to use them for their purchases. Reward programs, such as the One Credit Card's 1 reward point for every ₹50 spent, allow customers to accumulate points that can be redeemed for discounts on future purchases, further enhancing the value proposition of credit cards.

7. Promotion of a Cashless Economy

The Government of India's efforts to combat corruption have included the promotion of digital payment options, which are easier to track and reduce the costs associated with printing and distributing cash currency. As more merchants embrace cashless payments, customers are increasingly exploring credit cards as a convenient payment alternative that offers additional benefits such as cashback rewards.

The combination of these factors has contributed to the growing demand for online credit card services and the increasing number of credit card users in India.