The Indian smart payment card market is projected to increase from 157 million shipments in 2016 to 342 million shipments in 2021, according to the latest digital security report from IHS Markit. A smart payment card is a plastic credit, debit or prepaid card with an embedded chip designed for secure EMV (Europay, MasterCard and Visa) payments.
Remarkable 423 percent growth in 2016
The market for smart payment and banking cards in India started to take off in the second half of 2015. We estimate that 30 million smart payment cards were shipped in 2015, swelling to around 157 million shipments in 2016 — an increase of 423 percent. Although growth and volume shipments in India won’t be as high as they are in countries like China and the United States, there is still good market potential for smart card suppliers in the region.
Scrapping of the 500 and 1,000 rupee
India’s decision to scrap the 500 and 1,000 rupee notes in November 2016 has led us to project a considerable boost in digital payments from 2017 to 2021, which will increase demand for EMV-compliant payment cards. Shipments of smart payment and banking cards in the country are projected to grow strongly, from 157.4 million in 2016 to 342 million in 2021.
Mobile payments also projected to boom
The decision to abandon the two highest denomination currencies will also have a positive impact on the mobile payments sector, which has seen an explosion of mobile payment users in the country. Companies such as Paytm, MobiKwik and ItzCash have all seen a significant uptake in their mobile solutions as a result of the scrapping of these rupee notes. Samsung has also launched its Samsung Pay mobile payment solution in India, and Apple is looking to roll out Apple Pay in the country sometime soon.
The mobile handset has a unique set of advantages that can help to overcome some of the challenges posed by the Indian payment landscape. Mobile devices offer a low-cost means to create financial access and payments. Improvements in the telecom infrastructure, access to internet connectivity and low-cost smartphones will eliminate the need for hardware based on fixed-line connections. Mobile-based payments can potentially lower the acceptance costs for merchants by eliminating the traditional onboarding process, hardware, authentication and connectivity.
Initial growth to come from high-value consumers and business users
Expansion of the smart payment card market in India will focus on consumers with high disposable incomes and business users until such time as credit cards become more attractive to aspiring younger generations in the upper and middle classes.
Payment and banking card development is initially being launched in cities and large metropolitan areas throughout India, as such areas tend to have more advanced infrastructure and high-value customers than rural locales.
Many of the themes discussed in this research note are explored in greater depth in IHS Markit’s recent Digital Security Report – Volume 3 – 2017 report.