The number of people holding debit cards has been falling continuously for the last 6 months. According to data from the Reserve Bank, the number of debit cards in the country fell 11% from 99.8 crore in October 2018 to 88.47 crore in April 2019.
This decline comes at a time when the government is pushing banks to increase the number of point of sales or card terminals to promote digital payments.
Bankers speculate that this is due to the replacement of cards with magnetic strips with a chip at the behest of the central bank. A senior banker said, ‘A large part of debit cards are of cards with magnetic stripe, which have to be replaced with a chip or PIN.
Although many cards have been replaced, a large part has not yet reached the customers due to various reasons. This may have led to this decline. ‘ Bankers said that the biggest challenge is for public sector banks, which deal with village customers, who have little understanding of debit cards. They do not use the cards daily, due to which they will not be aware that their card has been discontinued.
Because of this, they would not have gone to the bank to get a new card. This can also be a reason for the decline in the number of debit cards. Another top banker said that one of the reasons may be that some Jan Dhan accounts have become inactive and some cards have expired.
India is primarily a debit card market. Debit card is the initial and most commonly used digital payment mode. On-boarding of the customer is also done with the help of a debit card to transact through the Unified Payments Interface as it has the highest reach.
One banker said, “Encouraging customers to use debit cards in addition to withdrawing money from ATMs is the biggest challenge for bankers and payment executives.” Debit cards were swiped 80.8 million times at ATMs in April.
This figure is 6% higher than the 75.8 million in April 2018. At the same time debit cards were swiped 40.7 crore times at the point of sale, which is 22% higher than the 33.37 crore in April last year. On the one hand, while the number of debit cards is falling, on the other hand the number of credit cards has increased at a slow pace. The total number of credit cards was 4.8 crore in August 2018, compared to 3.7 crore in April last year.
