Credit cards losing share in India's booming digital payment space

Credit cards' share of retail digital spending in India declined to 4.5% in August, despite overall digital transaction growth. A Jefferies report notes a moderation in spending growth and a drop in online transactions, even as more cards are issued.

Credit cards are losing ground in India’s rapidly expanding digital payments ecosystem, with their share of retail digital spending declining further in August, even as overall digital transactions continued to grow, according to a Jefferies report.

The report noted that retail digital spending, excluding NEFT, grew 18 per cent year-on-year to Rs 44.8 trillion in August 2026. However, credit cards’ share of this spending declined to 4.5 per cent, down 50 basis points year-on-year and 20 basis points sequentially. “Credit card share of retail digital spending (ex NEFT) fell MoM,” Jefferies said, highlighting the widening gap between the growth of the broader digital payments ecosystem and credit card usage.

Spending Growth Moderates Amid Card Expansion

The trend comes against a moderation in credit card spending growth. Industry credit card spending grew 5.5 per cent year-on-year in August, compared with 7.1 per cent in July, while spends declined 2.8 per cent month-on-month to Rs 2.0 trillion. At the same time, the number of credit cards in circulation continued to expand. Industry cards-in-force rose 9.5 per cent year-on-year to 122.7 million in August, indicating that the moderation in spending was occurring despite continued growth in the card base.

Shift in Online Spending Composition

Jefferies also highlighted a shift in the composition of credit card spending, particularly in online transactions. The industry's online spending share declined 300 basis points month-on-month to 61 per cent in August, while SBI Cards' online spending mix fell 700 basis points to 60 per cent. The report said, “Industry's share of online spending in total spending was down by 300bps MoM to 61%; SBI Cards share of online spending fell 700bps to 60%.”

Spotlight on SBI Cards

For SBI Cards, the pressure was more pronounced. Its spending growth slowed sharply to 7 per cent year-on-year in August from 22 per cent in July, while its share of industry spends declined to 17.5 per cent from 19 per cent. The brokerage attributed the moderation partly to lower corporate spending, with SBI Cards' online spending declining 1.5 per cent year-on-year.

Despite the softer spending momentum, SBI Cards continued to add customers. Its cards-in-force growth improved to 7.6 per cent year-on-year, while the company added 0.19 million cards during August, taking its share of industry net card additions to 18 per cent. Jefferies said, “Industry credit card spending growth moderated to 5.5% YoY in Aug-26 from 7.1% in Jul-26, with spends declining 2.8% MoM to Rs2.0tn.”

The report also pointed to softer spending intensity, with SBI Cards' spending per card declining to Rs 15.4 thousand in August from Rs 17.4 thousand in July and remaining below the industry average of Rs 16.4 thousand.

Divergence in India's Payments Landscape

Overall, the data points to a divergence within India's payments landscape: digital payments continue to expand rapidly, while credit cards are accounting for a smaller proportion of the broader retail digital spending pool. At the same time, continued growth in cards-in-force suggests that the structural expansion of the card base remains intact even as spending growth moderates. (ANI)

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