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India’s prepaid card market to surge to US$134.59B by 2028

Prepaid card market (value terms) in India increased at a CAGR of 18.4% during 2019-2023. Over the forecast period of 2024 to 2028, the market is expected to record a CAGR of 29.7%, increasing from US$35.69 billion in 2023 to reach US$134.59 billion by 2028, according Research and Markets.

This report provides a detailed data centric analysis of prepaid payment instruments, covering spend through prepaid cards and digital wallets across retail and corporate consumer segments. In addition, it provides a snapshot of consumer behaviour and retail spend dynamics in India. With over 100 KPIs at country level, this report provides comprehensive understanding of prepaid card and digital wallet card market dynamics.

The prepaid card market continued to record strong growth in 2023, on the back of rising UPI adoption, and the trend is projected to continue further over the medium term. Improved digital payment infrastructure, coupled with higher smartphone penetration, has aided the adoption of prepaid payment instruments such as digital wallets and prepaid cards over the last few years.

In 2024, the publisher expects adoption to grow further, especially in Tier II cities and beyond. Businesses, as a result, are projected to launch new prepaid card products over the medium term. This will aid the competitive landscape in the Indian prepaid card industry in 2024. Overall, the publisher maintains a positive growth outlook for the prepaid card industry in India over the next three to four years.

Unified Payments Interface (UPI) continues to lead prepaid card industry growth in the Indian market
UPI transactions, in January 2024, set a new high reaching INR 18.41 trillion, showing a slight increase of 1% from the previous month’s INR 18.23 trillion. The number of transactions also saw a 1.5% rise, reaching 12.20 billion compared to October’s 12.02 billion.

To provide some context, on the consistent growth achieved by UPI, the transaction value was INR 17.4 trillion, with 11.4 billion transactions in November 2023. Data from the National Payments Corporation of India (NPCI) reveals that January’s figures represent a 52% increase in volume and a 42% increase in value compared to the same month in the previous financial year.

The government has been pushing for the growing adoption of UPI. The Reserve Bank of India, in September 2022, introduced UPI Lite enabling consumers to make low-value digital payments without utilizing a remitter bank’s core banking systems in real-time. In the Interim Budget 2024-25, the government allocated INR 14.41 billion for the promotion of RuPay debit cards and low-value UPI transactions.

The scheme has been launched to offer financial rewards to banks that encourage the use of RuPay debit cards for Point-of-Sale (PoS) and e-commerce transactions. Additionally, it aimed to promote low-value BHIM-UPI transactions (P2M) amounting to Rs 2,000 or less. Although the allocation is significantly less compared to last fiscal year, the scheme is expected to further deepen the digital payment ecosystem in India over the medium term.

New prepaid card product launches will further drive the competitive landscape in India in 2024
With the adoption of prepaid payment instruments on the surge among consumers across age groups, businesses are launching new prepaid card products increasingly to tap into the growing industry.

The State Bank of India, in September 2023, launched the RuPay NCMC Prepaid Card to simplify digital payments for metro, bus, water ferry fares, parking, and more, all with a single card. Moreover, people can also utilize the National Common Mobility Card (NCMC) for payments in retail stores and e-commerce purchases.

Anq, in January 2024, launched a prepaid reward card called the X card, which is supported by RuPay. This card is developed to encourage responsible financial habits, allowing users to make purchases within their budget while earning rewards such as Digital Gold and digital assets for every transaction. The X card comes with a chip for added security and supports contactless payments across India.

The publisher expects more such new-age businesses and traditional banking institutions to launch prepaid card products in the Indian market. This will continue to aid the competitive landscape and market growth over the medium term.

Prepaid payment instrument providers are banking on diversification to aid revenue growth in India
Although digital payments have continued to grow over the last five years and the trend is projected to keep up over the medium term, the competitive landscape is also growing rapidly, making it difficult for businesses to achieve a strong growth rate in the sector. Furthermore, RBI is seeking to cap UPI transaction volume for digital wallets like PhonePe and Google Pay. As a result, prepaid payment instrument providers such as PhonePe are banking on diversification to aid revenue growth.

PhonePe, for instance, has been expanding its presence in different business verticals including in sectors like lending and insurance. The firm, in January 2024, revealed that it had sold 9 million insurance policies over the last two years. PhonePe has attributed the growth to its strategic partnerships with insurance firms and customized offerings for its customers.

PhonePe, in 2024, is also set to launch consumer lending products. This is part of the firm’s strategy to tap into the growing credit demand in the Indian market. From the short to medium-term perspective, the publisher expects more digital wallets to diversify their offerings to aid revenue growth. Research and Markets

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