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SBI Cards Vs UPI | Yadnya Investment Academy

SBI Cards Vs UPI | Yadnya Investment Academy

Published on 07 April 2021 .Views 50 .Comments 0
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In a recent report, data of UPI transaction of March 2021 has been released. Do the data present a significant figure of UPI transactions which is resulting in a stressful situation among SBI Card Shareholders regarding whether to stay invested or not? So, what is the report, and what lies ahead in this stock? Let’s discuss a bit in detail.


  • As per the recent report, a total of 270 Crores transactions has been done in March 2021. This 270 Cr. transaction in terms of Rupees values Rs. 5 lakh crore.
  • As the step of Demonetisation of Government in India taken in 2016 also focused on pushing of digital transaction in India.
  • Normally, shifting from physical transaction to digital transaction would have taken 5-7 years, but this pandemic made this possible in a 1-year time frame at least in the case of digital payments. We can also term it as a Digital Revolution.

Concerns of Cardholders:

  • The major concern of cardholders whether of a debit card or credit card is will this UPI business will replace the traditional cards business.
  • Fairly looking, there is direct competition for debit cards, as the wants of debit cards can be easily fulfilled.
  • Hence, directly, increasing the UPI market may affect the debit card business.

Will UPI seriously affect the Credit Card business?

  • Since both of them are digital transactions, and just like day by day market share of UPI is increasing, UPI might surely acquire some share on the digital payment side.
  • But, one special thing to be kept in mind is that penetration of Credit Card in India is very low.
  • In India, for every 100 people, only 3 cards are issued whereas, in the USA, 300 cards are issued for every 100 peoples. It shows the gap between the developing nation and the developed nation.
  • Also, the Demographic Dividend i.e, population below the age of 35 years of India is 65% and the process of urbanization is growing at a faster rate in India. Both factors can work in the favor of the credit card side in the future.
  • In short, market penetration of credit cards can enlarge in the coming time.

Debit Vs. Credit:

  • The core income source of credit cards is the interest charged by them on credit cardholders on delay or failure of payment.
  • The interest rate on credit varies from 36% to 38% annually.
  • The growing millennial crowd in India which of course will spend a lot may prove for credit card business.
  • The prospective customers of the Credit card business are the customer who make defaults on their loans or who pays late.

Investment view:

  • There is only one player listed in the Credit card business in India and that is SBI Cards.
  • Since there are no other players listed in the market, SBI Cards enjoys a scarcity premium and Institutional Investors whether FIIs or DIIs are left out with only one alternative.
  • In addition to these, the holding of the parent company in SBI cards is also high and therefore there is low supply in the market which will always provide some premium valuation to this stock.
  • SBI Cards will always trade at premium valuation due to no peers listed in the market.
  • The under penetration of credit cards in India will help a lot to this company to gain a healthy market share.


The point to catch from growing UPI market share is that they are gaining these shares from the cash market. This also shows the market is digitalizing and which will benefit both UPI and Cards as well. Further, in the future, UPI may also charge some fees for their operations which may affect the UPI market also and NPCI is also trying to strict the market share up to the limit of 30% only for any third-party payment services.

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