Even as there are various digital options to pay for your shopping, debit and credit cards continue to be the most reliable mode of digital payment, accounting for half of the total volume of payments. “ If the recent surge in the adoption of POS machines amongst small retailers is any indication, card payments are only going to grow further in the coming time, Vikas Varma, Chief Operating Officer, South Asia, Mastercard, told Samrat Sharma of Financial Express Online, in an interview. While intermittent internet connection makes digital payments tough at times, Vikas Verma said that even though internet penetration in India lags behind those of many other nations, it is still the second largest market after China in terms of internet usage.
1) How relevant is it to carry a debit card in the world fast-moving towards UPI and wallet payments?
We must remember that about 90% of retail transactions in India are still in cash. Therefore, the real competition is not among different form factors but with cash. This also means that there is a massive opportunity to start a socio-economic movement by bringing together merchants, consumers, acquirers, and fintech companies to expand the acceptance of digital payments in India. This can be done by generating consumer and merchant awareness and building enabling infrastructure.
The Government’s push to transform the country into a less-cash economy has given a huge impetus to digital payments. In FY 19 alone, the country registered over 31 billion digital payment transactions, a 51 per cent increase over the previous year. Further, the government has an ambitious target of 45 billion digital transactions in FY20. As per RBI data, ATM and PoS terminals across the country have grown at a CAGR of 4% and 35%, respectively over the past 5 years. In addition to this, during the past 5 years, the number of credit cards issued increased from 211 lakh to over 550 lakh and in the same period a steep increase in debit cards has been witnessed from 5535 lakh to over 8000 lakhs.
2) How is Mastercard still a lucrative option to have in today’s era?
Mastercard is a leading technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. Mastercard’s products and solutions make everyday commerce activities – such as shopping, travelling, running a business and managing finances – easier, more secure and more efficient for everyone.
For us, India is among the most promising long-term opportunities. The Government of India’s vision of a USD 5 trillion economy presents a huge opportunity for the digital payments industry as do the innovations taking place in terms of products and solutions for India and made in India for the world – at Mastercard and across the ecosystem as well.
3) Do you think that intermittent and unreliable internet access in the country still opens a wide path for debit cards?
Even though internet penetration in India lags behind those of many other nations, it is still the second largest market after China in terms of internet usage. As of November, last year, there are over 64.2 crore and 1.9 crore wireless and wireline broadband subscribers, respectively across the country. As per a report by the Internet and Mobile Association of India (IAMAI), most of an average mobile bill today pertains to data charges as opposed to just voice services. This is evident from the content viewership trends and the rising volume of digital payments seen in the country.
As per a report by Indian Ministry of Electronics and Information Technology, within the digital payments space, cards continue to be the most reliable mode of digital payment, accounting for 50 per cent of total volume of payments. The maximum volume is being seen in smaller tier 2 and tier 3 markets, where for the retailers, optimization of queue management, cashier throughput, cash handling are big considerations. If the recent surge in the adoption of POS machines amongst small retailers is any indication, card payments are only going to grow further in the coming time.
4) What are your recommendations to the policymakers towards debit/credit card businesses?
We need to see how we can encourage as many startups and enable them. The key for their growth would be use of universally accepted interoperable standards and enabling competition. We believe that India needs forward looking policies that would help the growth and innovation of new age Indian start-ups and also improve the ease of doing business in India, while protecting the privacy of individuals with respect to their personal data.
5) How much has the fraud/cloning hit the debit/credit card businesses?
We have invested over a billion dollars globally to make transactions safer. Our work in delivering global standards of safety, security and a best in class user experience is a global priority for us, which we have scaled to fit India’s needs. We seek to replicate within a domestic environment the highest levels of security and criticality, leveraging our services like using our best-in-class mobile and AI tools.
With our investments in AI and early detection capabilities to interpret the complexity and scale of data, spot anomalies and commonalities, and improve the shopping experience, we are now able to look at every transaction that happens, in real time, and can detect more complex fraud patterns.