News

In India, most use debit as 'glorified ATM card'

July 13, 2003

MUMBAI, India -- In a bid to boost debit and credit card usage in India, iissuers, acquirers and transaction companies are offering discounts and prizes to customers.

According to a report in the Business Standard, Visa will kick off an area development program with its member banks in seven cities beginning July 15. Standard Chartered Bank has begun a similar program for its credit card holders.

The Visa program will be conducted in Indore, Bhopal, Coimbatore, Nagpur, Kanpur, Lucknow and Nashik and will continue through September.

Visa, along with member banks, has tied up with around 100 merchants in each of these cities. Customers will be offered discounts of 5 to 20 percent at the participating retail stores.

For purchases through a credit or a debit card above rupees 300 ($6.52 U.S.), customers will be given a scratch card.

According to the Business Standard report, debit/credit transaction volume is low in India. About 95 percent of debit card transactions are ATM cash withdrawals, with only 5 percent point-of-sale debit. The figure has remained constant over the past year even as the number of debit cards has grown tremendously.

"Though there is an increasing issuance of debit cards in Tier II cities, plastics have remained in the wallets or are being used as 'glorified ATM cards.' It is a customer education issue. The debit card as a product is quite nascent," said Santanu Mukherjee, Visa International's country manager of South Asia.

Visa's debit card base grew 284 per cent to 5.4 million in March 2003 from 1.90 million in March 2002. It rose to around 6.5 million by the end of June 2003.

The total debit card base is approximately 11.1 million. The growth in debit cards is due to a spate of public sector banks issuing debit cards and banks converting their ATMs cards into debit cards.

The growth in the credit card base has been lower, at 30 percent to 4.479 million in March 2003 from 3.44 million in March 2002.

The average ticket size on debit cards is around rupees 800 to 900 ($17.40 to $19.58), while that of credit cards is at rupees 1,800 to 2,000 ($39.15 to $43.50).