Indian credit card industry touched a high of over 27 million cards during 2003-08
Uttam Nayak, Group Country Manager (India and South Asia) for US-based payment services giant Visa, shares his insights with Business Line on the credit card industry even as it adopts newer technologies to remain relevant in the business.
For the last two years, the credit card industry in India has remained stagnant at around 19 million cards. What could be the reasons for this?
The Indian credit card industry achieved among the highest growth rates globally during 2003-08 and touched a high of over 27 million cards, thanks to aggressive pricing and some players offering “free for life” cards.
During the crisis of 2008, there was significant rise in customer defaults forcing banks to scale back their acquisition of new customers and consolidate their portfolios, close inactive accounts and weed out defaulting customers. And, then, Deutsche Bank and Barclays Bank too exited from the business. All these led to the industry shrinking to under 19 million customers.
How are the banks/card companies reworking in the face of slowing growth?
The industry has started using the services of credit bureaus and is focussing on creditworthy customers, preferring quality over quantity. Banks have been reworking their strategies and now we see customer acquisitions growing.
How are companies, such as Visa, addressing the issue of scaling up the mobile point-of-sale channel in a cost-effective manner?
India has seen two companies selling indigenously developed mobile PoS terminals and they have deployed over 25,000 such devices, taking cards to around 350 cities.
In India, the mobile PoS channel has received overwhelming response from tier II centres and is being used in areas such as insurance, e-commerce, cab services and restaurants.
Small outlets are using this innovation for collecting payments for home deliveries made to customers. This helps save on costs, time and effortm which were earlier spent on cash collections.
The Nachiket Mor committee has recommended opening e-banking accounts. What are your views on this?
Visa is delighted that the Nachiket Mor committee report also echoes our view about the need to bring banking to the doorstep of every Indian with instant opening of accounts using Aadhaar authentication. This would migrate customers away from cash to the more transparent and accountable electronic payments system.
What kind of innovations are being carried out for customers’ convenience?
Visa has taken financial literacy and money skill training seriously. We recently launched a unique year-long initiative with Tinkle comics to educate and generate awareness through the popular protagonist, Suppandi.
Visual art forms, such as comics and short stories, have proved successful in engaging with all age groups. This financial literacy initiative aims to help people of all ages learn the fundamentals of personal finance.