According to a new report by ZET, India's fast-growing fintech platform with the largest number of agents for financial distribution, the convenience and accessibility of using credit cards is helping to spur an increase in demand in Tier-II and III towns and cities, with fuel cashback credit cards seeing high demand, as well as travel and e-commerce credit cards seeing a higher adoption rate in 2023.
With growing fuel costs, fuel credit cards have grown in popularity in Tier II and Tier III cities, with the largest demand, showing 17% YoY growth in 2023. These cards often offer cashback, reward points, or gasoline discounts, making them appealing to a wide range of clients, even those living in smaller cities and towns. BPCL SBI Credit Card, Indian Oil Kotak Credit Card, and IDFC HPCL Credit Card were the three most popular fuel cashback cards.
With increased accessibility and expanding leisure desires among residents in Tier II and III cities, travel credit cards have gained appeal in these areas as well. Travel credit card demand expanded the fastest in 2023, with a 27% YoY increase, as their products such as air miles, hotel discounts, and travel-related perks became increasingly popular among consumers in India's hinterland. Rising connectivity and infrastructural development in these locations have also contributed to an increase in travel credit card usage. As more people in these locations investigate travel possibilities, the appeal of such cards is likely to expand. The most popular options were SBI IRCTC, Axis Vistara, and IDFC Vistara.
Due to growing internet penetration and an enhanced logistics and delivery ecology, e-commerce was the third most popular card across India's Tier-2 and 3 cities. Demand for e-commerce cards surged by 24% year on year in 2023, owing to special incentives such as rewards, cashback, or discounts on online purchases. These cards are frequently advertised through partnerships with large e-commerce platforms, which offer exclusive deals and rewards for online purchasing. Tata Neu HDFC Credit Card, Swiggy HDFC Credit Card, and Axis Flipkart Credit Card were the three most popular credit cards.
"In India, credit card penetration is low at just 5% of the population, but we are witnessing a rise in adoption in the last two years, and according to RBI estimates, the number of credit card owners could rise to 10 crore by early 2024 from 7.5 crore in April 2022," said Manish Shara, Co-Founder and CEO of ZET. Factors such as greater urbanisation, rising disposable incomes, rising ambitions, and the government's drive towards digital transactions have all contributed to this rise in use. It's great to see that India's Tier II and III cities are writing a new chapter in credit card growth as we push for financial inclusion in emerging markets."
According to the report, there was a 19% (YoY) increase in New-To-Credit (NTC) consumers, with nearly half of the consumers being under the age of 25. NTC customers liked the AU Small Finance Bank Credit Card, SBI Credit Card, and Axis Bank Credit Card.
