Usage of debit cards ups as compared to credit cards

Usage of debit cards ups as compared to credit cards

Indians are using more of debit cards than credit cards for their banking transactions, says the Reserve Bank of India (RBI) data for the year ended 2009-10. While the transactions through debit cards jumped by 42 per cent at Rs 26,418 Cr in the last fiscal from Rs 18,547 Cr in 2008-09, it slipped by 4 per cent for credit cards to Rs 62,852 Cr from Rs 65,356 Cr.

In the same period, the number of debit cards in circulation has also increased by 33 per cent as compared to a fall in credit card circulation by 10 per cent over the previous year.

The total number of debit cards increased to 17 Cr in 2009-10 from 12.8 Cr in 2008-09. On the contrary, the total number of credit cards went down to 23.4 Cr in 2009-10 from 25.9 Cr in 2008-09.

"Shopping through debit card has become more convenient now due to rise in point of sale terminals in various shopping centres," says Subrat Pani, business head- cards, Kotak Mahindra Bank. "Volume of transaction has increased due to easy availability of debit cards, which are given with every newly opened bank account."

Industry experts also attribute the popularity of debit card to the cautious attitude of Indian consumers as a result of the recent economic downturn.

"While debit card can enable the consumer to track their spending better, it is also a great payment tool for those who are credit averse or are not credit worthy," says a senior official at VISA, who did not wish to be named.

Downturn in the economy was the major reason for negative trend in credit cards. "During the slowdown, banks became cautious in issuing new credit cards to check defaults. Also, last year many lost their jobs which led to the decline in spending through credit cards," said Pani.

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