Debit cards have ‘come of age’ in Bharat

There has been significant increase in the use of debit cards in terms of volume of transactions and their value.

As per the latest data available with leading banks, value of debit card-based transactions has grown by over 25 per cent in the second quarter of this fiscal year even though there are individual variations from bank to bank in specific numbers.

For ICICI Bank, transaction value under the debit card segment had grown by 26 per cent at about ₹16,300 crore as on September 30, 2018, against ₹13,000 crore. In volume terms, there was 23 per cent growth.

Banks also gained from this. HDFC Bank has attributed increase in fee income in the second quarter to the spike in issue of debit cards and credit cards and fees associated with it.

According to R Prabu, Group CEO, Payswiff, the spurt in use of debit cards has come mainly from tier II and tier III locations consisting of rural areas where Point of Sales (PoS) machines have also been increasing in numbers.

This is testified by the fact that the share of PoS and e-commerce (which will also involve use of debit cards, along with others) has gone up by five basis points for SBI in the second quarter of the current fiscal. The NPCI data also indicate increase in transactions through debit cards. A senior official of SBI said post demonetisation, there has been a general spurt in the use of alternative channels and debit cards have “come of age’’ in many rural locations.

Jan Dhan push

Another driving factor has been the spurt in Jan Dhan accounts whose benefits are linked to use of RuPay debit cards.

As on October 17, 24.74 crore RuPay cards had been issued by the National Payments Corporation of India to Jan Dhan account holders, the majority of whom reside in rural areas. There are 33 crore beneficiaries with an aggregate balance of ₹864,81 crore.

Data from banks reveal that the average balances in Jan Dhan accounts is in the range of ₹1,500-1,900, which is driving card use as well.