Half of credit, debit cards in India inactive

Nearly half of credit and debit cards in India were inactive, possibly due to insufficient resources in bank accounts and a holding of more than one card, a study has said.     

A study by Edgar, Dunn & Company (EDC) and India Cards Council (ICC) has revealed that unlike in UK and Australia where 90 per cent cards are active, there are only 56 per cent active debit cards in India. "There is a very low level of debit card usage at POS (Point of Sale) compared to other countries. For example: 26 per cent of active debit cards used at POS versus 86 per cent in the US and 45 per cent in Australia," the study said.     

"The very low costs associated with new cardholder acquisition may indicate that insufficient resources are being applied to checking credit worthiness of applicants," it said. Another reason could be because of insufficient resources in cardholders bank accounts, it added.     

Debit cards are primarily used for ATM withdrawals, to support cash-based transactions, EDC said. In the credit card segment too, India only has 56 per cent active cards against 80 per cent in Australia and 75 per cent in Singapore, the study said. Credit losses in India also are relatively high because of low level of transaction volume and value across the card base, EDC said.