Chennai: Discontinuation of magnetic stripe cards and mass closure of zero balance accounts saw 154 million debit cards going out of use at the end of September quarter.
There were about 836 million debit cards and about 53 million credit cards in circulation at the end of September quarter. Between September 2018 and September 2019, there was a reduction of about 154 million debit cards, though the number of credit cards went up by about 11 million, according to data from Worldline India.
“The fall in debit cards is likely due to the discontinuation of magnetic stripe and the mass closure of accounts with zero balances,’ finds Worldline. On the other hand, the rise in credit cards may be attributed to the growing digital payments and the expansion of retail borrowers in the market.
The reduction in cards also reflected in the growth in the transactions using debit cards. In Q3 2019, while the total number of credit card transactions went up 25.6 per cent to 540 million, debit card transactions grew only 6.4 per cent to 3.7 billion. Value-wise also, credit card transactions grew 25.8 per cent, while debit card transactions grew only 6.2 per cent.
Another important trend noticed was that debit cards are largely used for ATM withdrawals while credit cards for POS transactions. Of the total transaction value through credit cards, 99.3 per cent was used for POS transactions and only 0.66 per cent came through ATM transactions. On the other hand, 83 per cent of debit card transactions were ATM withdrawals and only 17 per cent were POS transactions.
Consumers tend to make larger ticket size purchases through credit cards at POS terminals when compared to debit cards. The challenge is to move ATM withdrawals, especially for PMJDY account holders, into digital payment transactions.
“While the number of card transactions done at merchant locations is on the up, ATM withdrawals data suggests that cards are being used for withdrawing cash in a big way and this is likely because there are little to no avenues for them to use their cards or other digital instruments,” said Sunil Rongala, Vice President, Strategy, Innovation and Analytics, Worldline India.
