Consumer Behaviour on Credit Cards in India-Marketing Project Report-Dissertation Writing Topic
Project Report on Customer Satisfaction in Credit Cards in India
Competitive Landscape of Credit Cards in India
Unlike debit cards, credit cards is governed by domestic commercial banks. ICICI and HDFC together account for around 38% of the total credit cards in circulation in 2009 and almost 46% in term of value transaction in the same year. However in 2009 there was no aggressive competition as banks where shifting from unsecured to secured forms of business in order to remain profitable. According to industry sources, ICICI has the largest network of POS terminals with over 40% of the total market share, followed by Axis bank and HDFC.
With the widest product portfolio (over 60 credit cards), ICICI has been the leading issuer of credit cards in India since 2005. However, in 2009, the bank’s share decreased to 21% with over four million cards in circulation, from 25% in 2008. As part of its domestic credit strategy, between 2009 and 2010, amid the recession and higher number of delinquencies, ICICI has reduced its credit card base by two million cards. The bank also stopped offering life-time credit cards to consumers.
According to industry sources, ICICI Bank has the largest base of POS terminals in the country which was estimated to be around 40%. With a view to bringing down transaction costs and growing its payment network more efficiently, in December 2009, ICICI sold its network of electronic POS terminals to First Data Corporation and hived its network of over 150,000 electronic swipe machines to ICICI Merchant Services.
In 2009, Visa continued to be the leading operator with 71% of the total market share in terms of number of cards in circulation. Visa is followed by MasterCard with a 23% share in 2009. Wide acceptance and aggressive promotion by Visa is giving the brand a clear edge over its counterparts. Visa also led in terms of transaction value to reach almost 76% in 2009 due to higher spend per card among its customers.
With a share of 19%, HDFC is the second largest credit card issuer. To further strengthen its position and to offer the highest level of security to its customers, the bank has announced its intention to supply credit cards compliant with the global EMV standard to its premium-segment customers. The initiative is expected to boost the migration from standard magnetic strip formats to chip-based smart cards.
To encourage more transactions on credit cards, issuers and operators are enhancing rewards programmes linked to transactions. They are trying to compete by offering various incentives to their customers. For example, ABN Amro Bank’s MakeMyTrip Go credit card holders will receive a discount voucher worth Rs5,000 from MakeMyTrip, on their first purchase using the MakeMyTrip Go Card, along with reward points on different purchases.
With a view to attracting credit-worthy customers and to reduce the default rate, increased numbers of banks are launching co-branded cards. In doing so, they can assess the paying capacity or the purchasing power of the partnered company’s customers and thereby reduce the risk associated with a credit card. For example, by having an ICICI Bank Kingfisher Airline Credit Card, the bank knows there is a reduced likelihood of a Kingfisher customer defaulting, in comparison with a normal customer.
2009 was a slow year with no significant development in terms of marketing and new product development. Because of adverse economic conditions, the market remain dormant with no active competition.
Credit cards are premium products which are largely used or owned by the affluent urban population working in multinational companies, which is why many banks like IDBI are still not issuing them and the category is predominately held by commercial banks. However, in terms of value and volume of transactions, foreign banks are the forerunners, followed by commercial and nationalised banks because of the majority of high income clientele that foreign banks such as Citibank and HSBC, have.
With an aim to increase the use of SBI cards at POS terminals and increase the number of SBI terminals, the bank has entered into a joint venture with Visa International and Elavon to set up 600,000 POS terminals for registering payments with credit and debit cards.
Source-Euromonitor. (2011). Data retrieved February 2, 2011, from
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