India Prepaid Card Market Outlook to 2028

India Prepaid Card Market Overview

• The India prepaid cards market is valued at USD 213 Billion showing significant growth over the past five years, driven by increasing digital payment adoption, financial inclusion programs, and corporate demand for salary and expense management solutions. The Reserve Bank of India (RBI) continues to implement guidelines to regulate prepaid payment instruments (PPIs), enhancing market credibility.
  

• The prepaid cards market is concentrated in major metropolitan cities, including Mumbai, Delhi, Bengaluru, and Hyderabad, due to high financial literacy, corporate headquarters, and tech-driven infrastructure. These cities exhibit higher prepaid card usage due to a significant number of digital-first consumers, a well-developed fintech ecosystem, and widespread adoption of contactless and mobile-based payments. The rural segment is growing steadily, backed by financial inclusion efforts; however, urban centers remain dominant due to widespread merchant acceptance and corporate transactions.
• The Indian government has implemented key regulatory measures to enhance the prepaid card industry, including amendments to Prepaid card Imports and Exports Regulations for streamlined processing, export benefit extensions via prepaid card mode, the Post Office Regulations 2024 for modernized postal services, compliance with evolving export regulations, and the adoption of electronic declaration systems, ensuring efficiency, transparency, and alignment with global trade standards.

India Prepaid Card Market Segmentation

• By Card Type: India's prepaid card market is segmented into closed-loop and open-loop cards. Closed-loop cards have a dominant market share due to their extensive use in retail, corporate incentives, and transportation. These cards, issued by specific retailers or organizations, offer convenience and security, making them popular for employee benefits and loyalty programs. Government-issued prepaid cards, such as those for public distribution schemes and subsidies, have further strengthened this segment.

• By Purpose: India's prepaid card market is also segmented by purpose into payroll/incentive cards, travel cards, general-purpose reloadable (GPR) cards, remittance cards, and others. Payroll/incentive cards dominate the segment due to the rising adoption by corporate employers for salary disbursement and expense management. With over 1.2 million Indian businesses using prepaid salary disbursement solutions, demand continues to rise as companies look for cost-effective, cashless payroll mechanisms. The demand is further amplified by government initiatives encouraging digital wage disbursement in SMEs and large-scale organizations.

India Prepaid Card Market Competitive Landscape

The India prepaid cards market is highly competitive, with major players comprising both traditional banks and fintech companies. Banks such as State Bank of India, ICICI Bank, and HDFC Bank dominate, while fintech companies like Paytm Payments Bank and MobiKwik are increasing their market share through innovative solutions and collaborations.

India Prepaid Card Market Analysis

Growth Drivers

• Digital Payment Adoption: India's digital payment ecosystem has experienced substantial growth, with the Unified Payments Interface (UPI) leading the charge. In January 2024, UPI transactions reached a record high of 18.41 trillion, marking a slight increase from 18.23 trillion in the previous month. The number of transactions also saw a 1.5% rise, reaching 12.20 billion compared to October's 12.02 billion. This surge underscores the nation's shift towards cashless transactions, creating a conducive environment for the proliferation of prepaid cards as a convenient digital payment method.
• Financial Inclusion Initiatives: The Indian government's efforts to promote financial inclusion have significantly impacted the prepaid card market. Initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY) have led to the opening of over 400 million bank accounts as of January 2024, bringing a large segment of the unbanked population into the formal financial system. This expansion has increased the demand for prepaid cards, especially among individuals seeking accessible banking alternatives.
• E-commerce Expansion: India's e-commerce sector has been on an upward trajectory, with the market expected to reach $200 billion by 2026, up from $50 billion in 2018. This rapid growth is driven by increasing internet penetration and smartphone usage. Prepaid cards have become a preferred payment method for online shoppers, offering a secure and convenient alternative to traditional banking channels.

Market Challenges

• Cybersecurity Concerns: With the rise in digital transactions, cybersecurity threats have also escalated. In 2023, India reported over 1.16 million cyberattacks, a significant increase from previous years. These security challenges can deter consumers from adopting prepaid cards, fearing potential fraud and data breaches.

• Limited Merchant Acceptance: Despite the growth in digital payments, not all merchants, especially in rural areas, accept prepaid cards. Approximately 63 million micro, small, and medium enterprises (MSMEs) operate in India, with many lacking the infrastructure to process card payments. This limitation hampers the widespread use of prepaid cards across the country.

India Prepaid Cards Market Future Outlook

Over the next five years, the India prepaid cards market is expected to witness significant growth driven by advancements in fintech, increased corporate adoption, and rising digital transaction volumes. The expansion of contactless payments, integration of blockchain for security, and continued financial inclusion efforts will create new opportunities for prepaid card providers. Additionally, collaborations between banks and e-commerce giants will shape the prepaid ecosystem, making it more accessible and seamless for end users.

Market Opportunities

• Integration with Mobile Wallets: The mobile wallet market in India is flourishing, with projections indicating a transaction value of $500 billion by 2025. Integrating prepaid cards with popular mobile wallets like Paytm and PhonePe can enhance user convenience, driving adoption among tech-savvy consumers.

• Corporate Payroll Solutions: Corporations are increasingly adopting prepaid cards for employee benefits and payroll solutions. In 2023, the corporate prepaid card segment witnessed a 15% growth, as companies sought efficient and transparent methods for disbursing salaries and incentives.