Though the financial year 2008-09 had been exceptionally challenging for the global economy, Indian payment card market seems to be not-so-affected by it. The number of credit and debit cards was estimated at 1,621 lakh as on March, 2009, posting an increase of over 321 lakh cards and registering a growth of 25% in the fiscal. The card acceptance infrastructure has been growing at a positive pace, registering a merchant terminal base of about 4.27 lakh, said a research by Venture Infotek, India?s only consumer payment processing company.
The debit card base increased from 1,024 lakh in March, 2008, to 1,374 lakh by March, 2009, registering a growth of 34% over previous financial year (2007-08). The credit card base, however, reported a negative growth of 10.34% at 246.99 lakh as compared with 275.47 lakh during financial year 2007-08.
Interestingly, the debit card market is estimated to grow at 26% to cross the 1,732-lakh mark in the country by March 2010. On the other hand, the credit card base is expected to fall further in 2009-10 to about 226-lakh mark, the research highlights.
India has seen remarkable growth in its debit card market over the past few years. The surge in debit card usage can be attributed to the ongoing economic slowdown and the cautious attitude towards spending money. The credit card business, however, is witnessing a crunch. With the increasing delinquency rate in the country, banks and card issuers are likely to remain hesitant to issue new credit cards. Many banks have been closing inactive and unproductive accounts from their credit card portfolio.
The research further said ICICI Bank, HDFC Bank, HSBC Bank, SBI and Citibank have over 80% share of the Indian credit card industry. ICICI Bank has the largest credit card base in India with 70 lakh credit cards in the market as on March, 2009, followed by HDFC Bank and HSBC Bank with market share of 16 % and 14 %, respectively. SBI trailblazes with 11% market share.
The market share of private banks has fallen to 47% in 2009 from 48% in 2008. Private banks have shown a decrease in their credit card base from 130.77 lakh cards in 2008 to 116.73 lakh cards by March 2009. The market share of foreign banks increased from 34% in 2008 to 37% in 2009. Public sector banks constitute 15% market share with 36.08 lakh credit cards. Other banks having card base of 2.13 lakh cover the balance 1% of market share.
Despite of decrease in the credit card base, the spends at merchant point of sale (POS) terminals increased by 13% to Rs 65,356 crore during the year 2008-09. However, it was lower than the 40% growth recorded in 2007-08. The average annual credit card spend has increased significantly to Rs 26,461 during the year 2008-2009 from Rs 21,049 during the year 2007-2008, reporting a growth of 26%, higher than the 18% recorded in the previous financial year.
SBI has emerged the leader in issuing debit cards with 30% of market share during the year 2008-2009, followed by ICICI Bank with 10% market share. AXIS Bank ranks third with a market share of 9%. The debit card spends at merchant POS terminals increased significantly by 48% to Rs 18,547 crore during the year 2009 from Rs 12,521 crore during the previous financial year.
In the financial year 2008-09, the average annual debit card spend at merchant POS terminals increased by 10% to Rs 1,350 from Rs 1,222 in the year 2007-08, lower than the 12% growth of previous year.
Also, the average spend on debit card is much lower than the average spend on credit card. A study by Edgar, Dunn & Company (EDC) and India Cards Council (ICC) has revealed that unlike in the UK and Australia where 90% cards are active, there are only 56% active debit cards in India.
According to the research, the spread of ATMs has increased from 34,789 in March 2008 to 43,651 in March 2009, reporting a growth rate of 25%. The ATMs are estimated to grow by 35% during the year 2009-10, where SBI is planning to increase their ATM outlets by around 75%. As per the RBI release, the volume of ATM transactions has increased from 17,797 lakh aggregating to Rs 438,151 crore during 2007-08 to 23,530 lakh aggregating to Rs 616,456 crore during 2008-09.
