Credit Card Market Evolution and Future Outlook

The credit card market has undergone significant evolution over the years, with the introduction of new technologies and innovations that have transformed the way we use credit cards.

In the past, credit cards were primarily used for in-store purchases, but the rise of e-commerce has led to a surge in online transactions.

Mobile payments have also become increasingly popular, with many credit card companies now offering mobile wallets and apps.

The use of contactless payments has also increased, with many merchants now accepting tap-to-pay transactions.

As a result, credit card companies have had to adapt to these changes and offer new features and services to keep up with consumer demand.

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The credit card market is evolving, and it's essential to target new customers to stay competitive.

Traditionally, credit card products have focused on specific segments, but now there's a need to penetrate newer segments to widen the customer base.

New customer segments to focus on include those in Tier II and III cities, self-employed professionals, and customers with income in the range of INR 2.5-5 lakh.

In the last couple of years, new players have entered the market, introducing new offerings that have been welcomed by customers.

To reach these new customers, consider targeting segments with low penetration, such as:

Customer engagement and retention are crucial for credit card issuers to stay competitive in the market. Issuers are now focusing on reward programmes and redemption flexibility, moving away from traditional practices like airport lounge access.

To improve customer engagement, issuers can publish key fact statements on their websites, sharing board-approved policies with customers. This transparency can reduce the number of customer queries and create a well-informed pool of customers. A dedicated portal for policy documents can make it easier for customers to access this information.

Issuers can also focus on activation campaigns to prevent card shrinkage, as inactivity can lead to card closure. By investing in activation campaigns, issuers can reduce the risk of losing customers. Here are some key areas where issuers can improve customer engagement:

By implementing these strategies, credit card issuers can improve customer engagement and retention, ultimately driving business growth and staying competitive in the market.

Customer engagement is key to retaining customers, especially in the credit card industry. Issuers are shifting their focus from enticing customers with signup rewards and airport lounge access to providing good rewards structures and loyalty benefits.

A good rewards structure can make a credit card sell well. For example, issuers that offer rewards programs and redemption flexibility tend to do better. In fact, issuers have been quick to introduce and modify their reward offerings post-pandemic, focusing on everyday expenses like groceries, streaming services, and food delivery.

Issuers are also focusing on customer centricity by publishing key fact statements, sharing policy documents with customers, and creating dedicated portals for policy documents. This helps reduce customer queries and provides clarity on charges and fees.

Activation campaigns are also crucial to prevent shrinkage of portfolios. Issuers must invest resources to activate cards within 30 days of application.

Here are some ways issuers can improve customer engagement:

By focusing on customer engagement, issuers can deliver more value to their customers and retain them in the long run.

Spending is a crucial aspect of customer engagement and retention. Credit card spending has been on the rise globally, with the US and China being two of the largest markets.

In the US, annual credit card spending has consistently increased from $3.46 trillion in 2012 to $4.02 trillion in 2022. This growth indicates a strong demand for credit cards and a willingness to use them for transactions.

In China, the story is similar, with annual credit card spending growing from 23.8 trillion yuan in 2013 to 45.6 trillion yuan in 2023. This represents a significant increase in credit card usage and adoption in the country.

To put these numbers into perspective, here's a breakdown of the growth in credit card spending in the US and China:

In India, the value of credit card transactions has also been increasing, from 1.5 trillion rupees in FY 2019 to an estimated 7.3 trillion rupees in FY 2028. This growth is driven by the increasing adoption of credit cards among the Indian population.

In South Korea, the value of credit card transactions has been steadily increasing, from 1.3 trillion won in 2002 to 2.3 trillion won in 2023. This represents a growth of 76.9% over the past two decades.

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As we explore customer engagement and retention, it's essential to understand how customers are making payments online. The most used payment methods in e-commerce worldwide in 2023, with a forecast for 2027, show a significant trend towards digital payments.

Credit cards are still a popular choice, but their market share is declining in some regions. In North America, credit card market share in POS and e-commerce in 2022, by country, shows a notable difference between the US, Canada, and Mexico.

In the Asia-Pacific region, credit card market share in POS and e-commerce in 14 territories in 2023 varies significantly between countries and territories. For instance, in some countries, credit cards account for over 50% of total e-commerce transactions, while in others, they barely reach 20%.

In Europe, credit card market share in POS and e-commerce in 15 countries in 2022 shows a similar trend, with some countries relying heavily on credit cards and others using alternative payment methods. In Latin America, credit card market share in POS and e-commerce in 6 countries in 2022 is also noteworthy, with some countries showing a strong preference for credit cards.

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Here's a breakdown of credit card market share in different regions:

These statistics highlight the importance of offering multiple payment options to cater to diverse customer preferences. By understanding the most used payment methods in e-commerce, businesses can optimize their checkout processes and improve customer satisfaction.

In the world of credit cards, circulation is a key metric that helps us understand the scope of the industry. There were 485 million open general purpose card accounts at the end of 2020, not including private-label cards.

Visa dominates the market, with a market share of about 48 percent at the end of 2021, based on the number of credit cards in circulation. This is a significant number, with 753 million credit cards issued by Visa.

Mastercard comes in second, with a market share of roughly 36 percent, and a total of 273 million credit cards in circulation. Discover and American Express trail behind, with a combined market share of about 16 percent.

Here's a breakdown of the number of credit cards in circulation for the top credit card companies:

The numbers are telling, and they suggest that Visa and Mastercard are the clear leaders in the credit card market.

The credit card market is undergoing a significant transformation, driven by technological advancements and the emergence of FinTech players.

Digital transformation is happening across industries, and the credit card industry is no exception. Established players are upgrading their offerings to more advanced platforms, improving their existing technology stack and processes with the help of technology partners.

New-age service providers are designing solutions that are easy to integrate and enable faster go-to-market along with supporting the launch of innovative products for credit cards. These solutions are hosted in the data centres of the solution providers and are made available to new and smaller issuers in the form of pay-per-use models.

FinTechs have transformed the payments industry by providing ease of conducting transactions, leading to customers expecting enhanced experiences and services from traditional banks.

Digital transformation is happening across industries, and the credit card industry is no exception. Established players are upgrading their offerings to more advanced platforms, improving their existing technology stack and processes with the help of technology partners.

These partners are assisting issuers by delivering cloud-enabled CMS platforms that have modular capabilities and provide better user experience. Legacy players are transforming their business models and modifying them according to emerging market needs.

Issuers have rapidly enabled the digitisation of processes across the value chain, covering services from onboarding to know your customer (KYC), settlements, repayments, and customer services. This was largely due to the pandemic.

Technology enablers are providing solutions that are easy to integrate and enable faster go-to-market, supporting the launch of innovative products for credit cards. New-age service providers are hosting these solutions in their data centres and making them available to new and smaller issuers in the form of pay-per-use models.

Acceptance has become a crucial aspect of the digital payment landscape. With the rise of online shopping, merchants are now able to accept payments from a wide range of credit card brands.

Visa is one of the most widely accepted credit card brands, with over 200 countries worldwide accepting it for online payments as of 2025. This is a significant increase from other credit card brands.

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Maestro, on the other hand, has a more limited acceptance rate, with only 163 countries accepting it for online payments. This is still a notable number, but it lags behind other major credit card brands.

American Express, or AmEx, is also widely accepted, with 191 countries accepting it for online payments. This is a significant number, but it still trails behind Visa.

Here's a comparison of the acceptance rates for different credit card brands:

As you can see, Visa is the clear leader when it comes to acceptance rates. However, the other credit card brands still have a significant presence in the online payment market.

Transactions have become an integral part of our daily lives, and the numbers are staggering. The total number of Visa credit card transactions processed worldwide has reached a record high, with over 1.7 billion transactions in the second quarter of 2024 alone.

The rise of digital payments has led to a significant increase in credit card transactions worldwide. In 2023, the total number of purchase transactions on global general purpose card brands, including Visa, Mastercard, and UnionPay, reached 1.3 billion.

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The United States is one of the leading countries in terms of credit card transactions. In 2022, the total number of credit card transactions processed in the U.S. reached 42.5 billion, with an average of over 1.1 billion transactions per month.

Singapore and Saudi Arabia also have a high number of credit card transactions per capita. In 2022, Singapore had a total of 1.3 billion credit card transactions, while Saudi Arabia had over 1.2 billion transactions.

Here's a breakdown of the total number of credit card transactions in these countries per capita:

Fraud is a growing concern in the world of Technology and FinTech. The total value of losses due to card fraud worldwide has been steadily increasing from 2014 to 2023.

According to the latest statistics, the total value of losses due to card fraud worldwide from 2014 to 2023 is a staggering amount. In 2023, this number reached a record high.

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The United States and the rest of the world have seen a significant difference in card fraud losses. In 2023, the total value of losses due to card fraud in the U.S. was $25.4 billion, while the rest of the world saw a total value of $53.6 billion.

Here's a breakdown of the total value of losses due to card fraud worldwide from 2014 to 2023:

The fraud losses per 100 U.S. dollars of card sales worldwide have also been on the rise, reaching a high of 0.12% in 2022.

The credit card market has seen a shift in business models, with issuers evolving from traditional models to more innovative approaches. In recent times, there have been many developments in credit card business models.

Issuers have adopted a co-branded partnerships model, partnering with other brands to offer customised credit card products. This model is based on revenue sharing of interest subvention and fee incomes.

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The co-branded business model has been widely adopted by large banks, who have partnered with e-commerce players to increase credit card sales. However, the RBI has introduced guidelines to safeguard customers' interests, limiting the co-branding partner's access to transactional and customer data.

Sourcing customers is easier in the co-branded model, as the partner brand helps in customer acquisition and marketing. However, cross-selling of other products is now more difficult due to the RBI guidelines.

The credit card industry has undergone significant evolution in its business models, where issuers have moved beyond traditional models to co-branded and BIN-sharing models.

In recent times, issuers have been experimenting with newer customer segments and differentiated product offerings, laying the foundation for constant evolution and growth in the industry.

The focus on loyalty and experiences supported by enabling technology platforms and solutions has been a key driver of growth in the last decade, setting the stage for exponential growth in the upcoming years.

Issuers have been adapting to changing market conditions by evolving their business models, which is expected to continue driving growth in the industry.

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The co-branded partnerships model is a popular business approach that involves partnering with another brand to create a customized credit card product. This model is based on revenue sharing of interest subvention and fee incomes.

A dedicated credit card product is built by the issuer with customized offers for the partner brand, requiring the issuer bank to build infrastructure for digital onboarding, customer servicing, and rewards.

Sourcing customers is easier in this model as the partner brand helps in customer acquisition and marketing for the co-branded credit cards. This can lead to an increase in credit card sales, as seen in partnerships between large banks and e-commerce players.

The RBI has introduced guidelines to safeguard customers' interests, limiting the co-branding partner to marketing and customer acquisition, while keeping transaction information and customer account details with the banks.

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Higher interest rates have been a significant factor in boosting company profits, particularly for credit card companies. Over the past decade, they've been able to raise interest rates, relying on this increase to drive profits despite relatively stable lending risks.

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The difference between the annual percentage rate and the prime rate has reached an all-time high, accounting for about 4.3 percentage points of additional interest rates across that period. This excess margin has huge effects, with major card issuers charging consumers about $25 billion in additional interest in 2023 alone.

Credit card companies have been able to quietly and steadily raise interest rates, driving profits without a significant increase in lending risks. Lower charge-off rates and a relatively stable share of cardholders with subprime credit scores have contributed to this trend.

Consumers are paying more in interest and fees than toward the principal, with about $105 billion owed in interest in 2022. This represents the primary cost of credit cards to consumers.

Here are the largest credit card companies by cards in circulation, based on the number of credit cards in circulation:

Visa had the largest market share in 2021, with about 48 percent of the credit card market, followed by Mastercard with about 36 percent.