Along with its launch of a debit card, Visa-Electron, HDFC Bank intends to install 100 electronic data capture (EDC) terminals in Mumbai alone. The intention is give a boost to plastic-culture by increasing the number of acceptance outlets. Beneficiaries in this case will be HDFC Bank's debit-card holders, Visa International credit-card holders and merchant outlets.

And this is how HDFC Bank's gambit is set to work. Debit-cards will be on offer to HDFC Bank's six lakh strong retail customers at a cost of Rs 250 per card. If they use their debit-card within the first month of issuance, they get Rs 125 off. Debit-card holders can also use it for settling utility charges via media the bank's Automatic Teller Machines (ATMs). To incentivise its customers to use its debit-card, HDFC Bank plans to offer a discount facility at select outlets.

The move to set up 100 EDCs is promoted by the fact that of the 100,000-a shade more actually-merchant outlets that accept credit-cards, only about 5,000 have EDCs. The rest have manually operated ones. What's worse, 60 per cent of the card-accepting establishments are located in the big five metros. Thus far, it has been credit-card players, which has been setting up EDCs. Growth of acceptance outlets has remained stunted because are shy of putting up EDCs at outlets that generate less than Rs 30,000 in monthly card-spends. Further, over and above the EDC costs, others that get loaded are those on account of marketing, picking up charge-slips, processing, sending hot-card warning bulletins, delivering payment drafts, reconciliation, merchant training and fraud control.

Says HDFC Bank vice-president retail banking Mudit Saxena: "We are in talks with a few other banks to share the EDC set-up costs. All this is a a forerunner to an eventual credit-card offering by HDFC Bank. We are already in talks with Visa International. More importantly, the debit-card offer is run-up to HDFC Bank's foray into e-commerce-both business-to-consumer (B2C) and business-to-business (B2B)-as it brings more customers and merchants online".

Said Visa International Asia-Pacific executive vice-president (south-East Asia and Greater China) James G Murray sums it up: "The launch of the HDFC Bank debit card is a milestone in the development of India payment industry".

The beauty of HDFC Bank's debit-card is that it uses both PIN and signature-based verification unlike the TimesBank's MasterCard-Maestro debit-card that operates only on a PIN-verification basis. In the case of HDFC Bank, being compatible on both accounts helps it overcome the critical flaw in the local market wherein there are only around 5,000 EDC-outlets. An added attraction of the HDFC Bank debit-card is that it is an international one. The association with Visa International gives debit-card holders access to over 8 million Visa Electron merchants around the world, including a million in the Asia-Pacific region. Another key factor that works in HDFC Bank's favour is that it is the only one in the country whose ATMs numbering 57 are networked to three payment systems: Visa International (Electron and Plus), MasterCard International (Maestro and Cirrus) and American Express (charge and credit cards).