MUMBAI: Concerned over the lack of card acceptance in shops despite most households now having debit cards, the RBI has decided to nudge banks to promote plastic payment. On the anvil are moves to direct banks to install more point of sales terminals in shops and also a proposal to rationalize charges banks impose on merchants.
The RBI on Monday floated a concept paper and invited comments to its proposals to improve card acceptance infrastructure. The report notes that in India the average number of card transactions per inhabitant at 6.7 is among the lowest in the World. The corresponding data for a few other countries reveal a much higher level of card usage – Australia (249.3), Canada (247.9), Korea (260.8), France (143.4), Sweden (270), United Kingdom (201.7), Brazil (54.8), China (14.4), Mexico (16.6) and Russia (47).
Besides mandating banks and rationalizing charges, the other proposals include setting up a fund for investing in card swipe machines. The note also talks about differential charges for government to encourage usage.
The report said while the card base in India is increasing rapidly, activation or usage rates of cards are quite low, especially for purchase of goods and services. Card usage at ATMs, on the other hand, is quite high. “A high number of debit cards have been issued in recent times under the prime minister’s Jan Dhan Yojana, especially to customers in rural areas and smaller towns. The growth in acceptance infrastructure has not kept pace with the growth in cards. While debit cards registered a growth of 64% between Oct 2013 and Oct 2015, during the same period ATMs increased by around 43% while POS machines increased by around 28%,” the concept paper said.
According to the report another disconcerting feature is that the rate of growth in setting up card acceptance infrastructure has also slowed down during these three years
While debit cards registered a growth of 64% between Oct 2013 and Oct 2015, credit cards grew at 23% during the same period. As at end-December 2015, the total number of credit cards stood at 2.27 crore while debit cards stood at 63.68 crore in the country.
But credit card swipe machines POS machines increased by around 28%. As of end-December 2015, the number of ATMs has increased to 193,580 while POS machines had increased to 12.45 lakh in the country.
Interestingly usage of debit cards has shown a jump of 72% in terms of volume and 63% in terms of value. “Based on inputs provided by card networks, it is understood that growth in debit card usage is largely witnessed in the CNP segment driven by e-commerce,” RBI said.