Analysis of Indian credit & debit cards and offers

By Vinit Maniar


June 13, 2012 1 Comments

A recent article by Economic Times on May 30, 2012 says credit card market in India has started booming again but this time it is about smart use of plastic money instead of wild use of mid 2000′s leading to the collapse of the whole market in 2008. We have done our own analysis on Indian credit & debit card market and can confidently say that banks are back in the business and are chasing consumers to expand the card market.

But this time it is not about no-credit-checking and quick-issual of cards. From what we understand this time banks are not interested in increasing their customer list blindly and are instead focusing on increasing usage of cards. To solve the issue of huge defaults they check data from credit bureau before issuing cards and give credit limits more cautiously. And to entice consumers who can spend money, they are coming out with amazing offers and rewards. If you ask us, this is the best way going forward — issue cards more wisely and entice consumers with offers. If you follow this principle then you get best of both worlds — high monthly/yearly card usage and low default rates.

Total number of cards by bank:

This pie chart shows Top 15 Indian banks by number of cards they have, including credit cards, debit cards and prepaid cards (don’t confuse it with the number of cards issued). As can be seen in the graph, ICICI Bank has the most number of cards, followed by SBI, Citi, HDFC, Axis and others. If after taking a quick look you are wondering why do you need 125 different cards or for that matter even 50 then you are not alone. Even we cannot understand why these banks have so many different cards considering a credit card is a credit card and a debit card is a debit card. All you do with a credit card is spend on credit and with debit card spend as much as you have in your bank account.

But it seems banks think differently. They want separate cards for separate purposes like shopping, traveling, fueling, etc. That is again fine by us but we fail to understand why have almost 50 co-branded credit cards (read ICICI) with colleges, telecom companies, NGOs, etc.? Why not have only a few, selected cards loaded with all possible benefits? Why can’t Indian banks pull off something like American Express? They have just 23 different cards in Indian market, each loaded with all possible benefits. And talking from organizations’ perspective, less cards would be easier to manage and market as well.

Comparison between number of credit cards and debit cards:

This graphic is self explanatory. If you compare only credit & debit cards available in India then there are three credit cards available in market for each debit card. If you think about it then it is obvious for banks to have more of credit cards and less of debit cards because they make more money when a credit card is used compared to money made when a debit card is used. And with credit cards there’s another stream of income — interest. Each time you forget to pay your card bill on time you are charged a hefty amount. According to the ET article, total credit card transaction in India stand at INR 96,600 crore in fiscal 2012, so even if banks earn a tiny percentage as interest from late payment, amount of money earned from interest alone would be huge.

Total redanar users by bank:

As can be seen in the graph, most of our users hold American Express cards (the creamy crowd :) ). HDFC Bank comes close by, followed by Citi, SBI, and ICICI. If you are a number cruncher then you would have surely noticed that in spite of having too many cards in the market, percentage of ICICI Bank cardholders is pretty less on redanar. And on the other hand though American Express offer few cards, their representation is pretty solid on redanar.

The main reason for putting up this graph is to show Top 10 banks whose cardholders are tech-savvy and are interested in making the most of their cards.

Comparison between credit and debit cardholders on redanar:

Now if there are three credit cards available in market for each debit card, number of credit and debit cardholders is of course going to be in favor of credit cards. The above graph validates our assumption. As can be seen in the graph, of total number of credit and debit cards added by our users, 82% are credit cards and only 18% are debit cards. You don’t have to be a rocket scientist to understand Indians love credit cards.

Total number of offers by bank:

Coming to the most interesting part, the above graph show number of offers by bank. Basically, we have listed Top 15 banks by number of offers they have at this moment on their respective cards. As can be seen, ICICI tops the list with the most number of offers, followed by HDFC, Citi, SBI and others. The list also throws up unexpected entries like that of Allahabad Bank, Vijaya Bank, Central Bank of India, Punjab National Bank, sold-out Royal Bank of Scotland and closed-down ABN Amro Bank. The reason why they are present in this list is Visa and MasterCard offers.

For the uninitiated, there are basically two type of offers — offers by banks and offers by Visa and MasterCard. Big banks come out with their own offers, applicable only to their cardholders. In addition to this, there are offers by Visa and MasterCard, which are applicable across all banks. For example, Citi bank cardholders are entitled to offers given by Citibank as well as Visa/MasterCard depending upon the card you have. If you have a Citibank Visa card then you can avail of Citibank’s own offers as well as offers given by Visa, and if you have a Citibank MasterCard card then you can benefit from Citibank’s own offers as well as offers given by MasterCard.

So even if a bank doesn’t have its own offer program you can still avail of Visa/MasterCard offers. This is the reason why small banks who don’t have their own offer program have popped up in our list of Top 15 banks by offers. These banks have a good amount of Visa and MasterCard cards, so you can still avail of amazing deals.

Now if a bank has developed its own offer program then you get doubly lucky (bank + Visa/MasterCard offers) as you have far too many offers to avail. If I have to pick banks with outstanding offer program then I’ll choose Citi, HDFC, ICICI, American Express, Kotak, SBI, HSBC, and IndusInd. And between Visa and MasterCard I’ll choose MasterCard because they have amazing dining program which Visa can’t match.

Talking about ICICI and why it tops the list, reason is ICICI has their own offer program, plus it offers MasterCard as well as American Express cards (the only bank in India to offer co-branded American Express cards). So if you pick your card well you can avail of amazing ICICI+MasterCard or ICICI+American Express offers.

A tip for card buyers: If you have figured out interest part then choose between Citi, HDFC and ICICI card with premium MasterCard branding (like Platinum, Titanium, Premium, or World), so that you not only get banks’ respective offers but MasterCard offers as well.

Total offers by category:

This graph proves that India is a nation of food lovers. As can be seen in the graph, 86% card based offers are dining deals, followed by travel (6%) and shopping (5%). Talking about why there are so many dining deals, everybody goes out for dinner at least once a week so it certainly makes sense for banks to offer dining deals (assuming you’ll swipe your card more often). Another reason why there are so many dining deals is that deals on restaurants are easy to come by because margins are pretty high in restaurant business. It is no big deal for a restaurant to offer 15% off or 20% off in return for some marketing, but you can’t get the same amount of discount from say a travel company because margins are not that good in that segment.

Total number of offers by city:

This is the city wise break down of number of offers. As can be seen in the graph, Delhi NCR tops the list with most number of offers, followed by Mumbai, Bangalore, Chennai, Hyderabad, Pune and others. This graph also proves that for most banks their cardholders are from these major metros, and that’s why they are offering more deals in major cities compared to deals in tier II or tier III cities.

Note: Total number of offers by category is different from total number of offers by banks because in total number of offers by bank, one MasterCard deal applicable on say five banks’ cards was considered as five deals (one each for each bank) where as in total number of offers by category we have only taken into account valid deals in each city regardless of it is applicable on which banks’ cards. But even in this case one Cafe Coffee Day deal in say five cities will be considered as one deal in each city.



As can be seen from number of offers these banks have come out with to entice consumers and the amount of marketing they are doing it is obvious banks are back in card business. And the amount of transaction done in past few years proves consumers have again started spending money through cards. So connecting two and two together we can safely say that there is a demand of cards and there is a supply of cards. We just wish banks do their work of issuing cards more responsibly and consumers spend money more responsibly, so that the party which has just began can continue forever.