The number of debit and credit cards outstanding in the country crossed one billion in 2018 and remained above that level throughout the second half of 2018, show data released by the Reserve Bank of India (RBI).
The number of debit and credit cards outstanding in the country crossed one billion in 2018 and remained above that level throughout the second half of 2018, show data released by the Reserve Bank of India (RBI). Even so, there was a limited growth in the number of times these cards were used to make actual digital transactions. The volume of point-of-sale (POS) transactions as a share of total cards outstanding rose to only 54.5% in December 2018 from 47.4% in December 2017.
RBI does not share data on the volume or value of card transactions made through the e-commerce channel. If e-commerce transactions were added to POS transactions, card usage figures would likely go up.
Card usage at ATMs, on the other hand, are nearly commensurate with the number of cards in the system. During the last three months of 2018, the volume of card transactions at ATMs ranged between 81% and 92% of the number of cards in circulation. This ties in with the fact that the cash in circulation (CIC) touched a new high of `20.4 lakh crore earlier this year. Experts have earlier said that the circulation of cash in the economy rises when major elections are scheduled.
Bankers, however, are optimistic about the prospects for digital transactions in the months ahead. After State Bank of India (SBI) announced its results for Q3FY19, chairman Rajnish Kumar told analysts that a bulk of transactions at the bank are happening through digital channels. “Now only 13% transactions happen at branches and rest all are either on digital channel or the ATM channel. Even the ATM channel is coming down as far as the percentage of transactions are concerned,” he noted.
Indeed, other digital modes of payment may also begin to take share away from cards. Bankers are keen on pushing merchant payments through the Unified Payments Interface (UPI) channel and are in talks with the government about ways to push merchant acquisition. Last month, FE had reported that banks have suggested to the government that smaller vendors be on-boarded as peers, thereby sparing them the merchant discount rate (MDR).