Travel Credit Card Market Expected to Reach $48.5 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Travel Credit Card Market,  By Type (Co-Branded, Non Co-Branded), By Provider (Visa, Mastercard, Others), By Application (Transaction, Discounts And Offer Redemption, Priority Access, Others): Global Opportunity Analysis And Industry Forecast, 2023-2032". The travel credit card market was valued at $16.4 billion in 2022, and is estimated to reach $48.5 billion by 2032, growing at a CAGR of 11.8% from 2023 to 2032.

The travel credit card market is poised for significant growth, driven by several key factors, trends, and opportunities. An increasing number of consumers are seeking ways to make the most of their travel experiences, leading to a surge in demand for travel credit cards. These cards offer an array of rewards, including points, miles, and cashback, which be redeemed for various travel-related expenses, presenting a compelling value proposition for frequent travelers. In addition, the global rise in affluence and disposable income, particularly in emerging economies, has expanded the potential customer base, as more individuals aspire to access premium travel amenities and experiences.

Furthermore, one of the major travel credit card market trends is the use of technology to enhance user experiences as mobile apps, contactless payments, and digital wallets have become standard features, offering convenience and efficiency to cardholders. Moreover, advancements in data analytics and artificial intelligence are enabling card issuers to tailor rewards and offers to individual spending habits and travel preferences, creating a more engaging and personalized customer experience in the travel credit card market.

Furthermore, collaborations with airlines, hotels, and other travel-related businesses lead to mutually beneficial arrangements, driving customer acquisition and retention in the travel credit card market. For instance, on July 2023, IDFC First Bank, Club Vistara, and Mastercard collaborated to launch a travel credit card that combines banking services with travel benefits. The co-branded credit card is designed to meet the changing demands of new-age travelers, offering convenience, security, and perks. Cardholders receive Club Vistara Points, lounge benefits, annual rewards, golf benefits, and cover for canceled flight and hotel bookings.

The joining benefits for cardholders of the Club Vistara IDFC FIRST Credit Card include a free Premium Economy flight ticket along with an upgrade voucher. The rewards structure for the card is based on Club Vistara Points, with accelerated points for different spending categories. The card also offers features like CFAR Insurance, providing coverage for non-refundable components of travel bookings. Customers of IDFC FIRST Bank apply for the card through a seamless digital process available on the bank's website and mobile application. Thus, there is room for differentiation through niche offerings, such as specialized cards for specific travel segments or unique perks tailored to distinct traveler profiles.

However, it is crucial to address certain challenges in the travel credit card industry such as the high annual fees and interest rates, as well as limited acceptance and partner restrictions, deter potential cardholders. Thus, striking a balance between providing valuable rewards and maintaining accessibility will be essential for sustained growth in the travel credit card market size. Therefore, with the right strategic approach, leveraging technological advancements, and addressing consumer needs, the travel credit card market holds significant potential for expansion and innovation in the coming years. For instance, on March 2023, Indian Railway Catering and Tourism Corporation Ltd (IRCTC) and HDFC Bank partnered to roll out a co-branded travel credit card, IRCTC HDFC Bank Credit Card. The single variant card is exclusively available on NPCI’s RuPay network.

Furthermore, the co-branded travel credit card is expected to offer seamless payment convenience and appealing benefits to customers for rail travel as well as their shopping needs. In addition, with RuPay Credit Cards now enabled on UPI for payments, this co-branded card provides impetus to further adoption and reach of digital payments across India. The card offers exclusive benefits and maximum savings on bookings of train tickets booked through the IRCTC’s ticketing website and through IRCTC Rail Connect app. In addition, the cardholders get a joining bonus, discounts on bookings and access to the several executive lounges at railway stations across the country. Thus, such strategies adopted by the players in the travel credit card market will enhance the growth of the market across the globe and it will further increase the adoption of best travel credit cards in the upcoming years.

Segment Review

On the basis of application, the transaction segment is the highest growing segment in the travel credit card market. This is attributed to its fundamental role in facilitating day-to-day financial activities for consumers. Travel credit cards are not solely reserved for travel-related expenses, they serve as versatile payment instruments for a wide range of transactions. This includes everything from grocery shopping to online purchases and dining out. With features like contactless payments and secure online transactions, consumers find convenience and security in using their travel credit cards for routine spending. On the other hand, the priority access segment is predicted to be the fastest growing segment during the forecast period in the travel credit card market.

This is because of the increasing demand for premium travel experiences. These cards cater to a more selective clientele, offering exclusive perks like airport lounge access, expedited security checks, and complimentary upgrades. As consumers increasingly seek elevated travel experiences and convenience, the appeal of priority access becomes a compelling factor. Furthermore, these cards often come with additional benefits like travel insurance and concierge services, further enhancing their attractiveness to frequent travelers and high-spending individuals. This combination of luxury and convenience is expected to drive the rapid growth of the priority access segment in the coming years.

By region, North America attained the highest growth in 2022 in the travel credit card market. This is attributed to the fact that the region boasts a well-established culture of credit card usage, with a large portion of the population relying on credit for various transactions, including travel expenses. This widespread acceptance and familiarity with credit cards have contributed significantly to the dominance of travel credit cards in North America.

Moreover, the region is home to numerous global financial hubs, including New York and Toronto, which house major credit card companies and banks. This concentration of financial institutions has facilitated the proliferation of travel credit card offerings, often with enticing rewards and benefits, further driving their popularity. On the other hand, Asia-Pacific is projected to be the fastest growing segment during the forecast period in the travel credit card market. This is attributed to the rapidly expanding middle class in several Asian economies. With rise in disposable incomes, individuals in these regions are increasingly seeking enhanced travel experiences, making them a prime customer of travel credit card issuers. In addition, many countries in Asia-Pacific are experiencing robust economic growth, leading to heightened interest in international travel. As a result, consumers in this region are showing a growing appetite for travel-related financial products, including credit cards tailored to their specific needs. These converging factors creates ground for substantial growth in the Asia-Pacific travel credit card market during the forecast period.

The impact of COVID-19 on the travel credit card market growth was predominantly negative. The pandemic led to widespread travel restrictions, lockdowns, and a sharp decline in global tourism, significantly reducing the immediate utility of travel-related rewards and benefits offered by these cards. This resulted in decreased card usage and acquisition rates, as consumers shifted spending priorities away from travel expenses. In addition, many card issuers temporarily scaled back or modified their rewards structures to adapt to the changing travel credit card market landscape. While some cards introduced temporary benefits like enhanced cashback for groceries or streaming services, the overall sentiment towards travel credit cards experienced a downturn. As the pandemic subsides and travel resumes, the market is gradually recovering, but the initial impact was largely negative.

Key Findings of the Study

• By type, the co-branded segment led the travel credit card market in terms of revenue in 2022.
• By provider, the Visa segment accounted for the highest travel credit card market share in 2022.
• By application, the transaction segment accounted for the highest share in the travel credit card market size in 2022.
• By region, North America generated the highest revenue in 2022.

The report profiles the key players operating in the travel credit card market analysis such as American Express Company, Bank Of America Corporation, Capital One Group, Caxton Payments Limited, Chase Sapphire Reserve, Citigroup Inc., HSBC, JPMorgan Chase & Co., Mastercard, and Standard Chartered. These players have adopted various strategies to increase their market penetration and strengthen their position in the travel credit card market.