Debit card usage outpace the use of credit cards
By Ankit Sharma
Apr 6, 2009
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The current slowdown has prompted people to switch on from their credit cards to debit cards, says the study conducted by Venture Infotek.

As per company's finding, the debit card transactions raised by around 36.6% during the six months between September 2008 and February 2009. On the other hand, the credit card transactions during the period rose by only 25%.

Similarly in terms of value, daily transactions through debit cards recorded an increase of 27.2% as compared to credit card transactions that marked a rise of 13.3%.

Even the RBI data for the period between April 2008 and January 2009 reported a rise of 51.4% in the total value of Point-of-Sale (PoS) transactions through debit cards. The value of PoS transactions for credit cards during the period was just 17.4%.

In volume terms also, the Indian consumers have used the debit cards more than credit cards for the PoS transactions during the period under review. The debit cards were used by 46.8% more customers where as the credit cards volume increased by 17.1%.

Managing Director of Venture Infotek, Piyush Khaitan said, "The Indian consumer is treading cautiously when it comes to purchases and is exhibiting a credit-averse behaviour. This can be seen from the steep rise in spends through debit cards vis-à-vis the rise in spends through credit cards in India. The ‘pay now' feature of debit cards discourages dependency on credit and helps in better financial planning and control of purchases by the consumers."

The RBI data says that the number of credit cards in circulation has come down from 28.3 million to 25.8 million during these six months. On the other hand, the number of debit cards raised by 25.2% to 131.4 million from 105 million.

It has been noticed that the debit card usage is rising due to the increased acceptance of the cards at both physical and online merchants. Besides they also serve as a ready consumer base in the bankable population of India.

Also the banks reluctance on issuing the credit cards has been another reason of debit cards becoming more common amongst the consumers.


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