India is one of the fastest-growing countries in the plastic money segment, with close to 350 million debit cards and 19 million credit cards in circulation.
Credit cards have a higher share in the discretionary category whereas debit cards dominate in routine expenses like utility payments. About 30% of credit card spends are being done online. At least 10-15% of customers use their cards only online, many from smaller cities, the central bank said in a report.
The RBI quoted studies of two major payment networks MasterCard and Visa.
According to MasterCard, 75% of all card payments are concentrated in top 20 cities with Delhi, Mumbai and their suburbs alone accounting for 43%. A Visa study reveals that people in the monthly income band of R75,000-1,00,000 are the most prolific users of electronic cards.
The RBI said electronic payments dominate their expenses: rail/airfare (71%), durable goods (61%), rent (49%), tele/mobile (47%), medical institutions (46%), clothing/footwear (44%), beverages and refreshments (35%).
Card payments form an integral part of e-payments in India because customers make many payments on their card paying their bills, transferring funds and shopping, said the RBI report on Enabling Public Key Infrastructure (PKI) in Payment System Applications.