In Cards, Credit Has Lost It To Debit

Debit card issuances rocket 350 per cent to 9.1 million in a year

Credit card has lost the race to the new kid on the block, the debit card. The total number of debit cards in the system increased by around 350 per cent to 9.1 million in December 2002, from 2.6 million in December 2001.

In contrast, the number of credit cards rose 40 per cent to 8.4 million, from around six million the previous year.

While Visa registered a 385 per cent growth in debit card volumes to 4.9 million in December 2002, from 1.01 million in December 2001, it registered only 21 per cent growth in credit card volumes during the same period from 3.2 million to 3.9 million.

During this period, debit card volumes for MasterCard are believed to have increased by more than four times, from one million to around 4.2 million.

However, figures for MasterCard could not be confirmed despite repeated attempts. While Visa and MasterCard issue both debit and credit cards, American Express, the third player, issues credit cards only.

Meanwhile, the total number of debit cards surpassed the number of credit cards in December 2002, according to Santanu Mukherjee, country manager, South Asia, Visa International.

Many public sector banks have started issuing debit cards. In fact, some banks now issue debit cards instead of ATM cards.

However, the spend on debit cards is not in tandem with the increase in volumes. The average spend on debit cards for most banks is around Rs 500 per month.

Statistics for Visa are as follows:

The average credit card spend for the year ended December 2002 was $361 or Rs 17,328 (at an exchange rate of Rs 48 per dollar).

Retail sales volume or the usage at the point of sale for the 12 months ended December 2002 was $1,137 million, up 36 per cent from $854 million the previous year.

Cash withdrawals through cards also increased 2.5 times, from $747 million in 2001 to $2588 million in 2002.

The massive increase in cash withdrawals on cards is attributed to the rise in debit cards. Many customers still use debit cards as ATM cards.

The card sales volume, which includes cash withdrawals and retail sales, jumped 138 per cent to $3,725 million in 2002, from $1601 million in 2001.

Visa registered 88.8 million card transactions as on December 31, 2002, up 98 per cent from 44.9 million transactions the previous year.

Getting thrifty

Debit card volume in the country increased by around 350 per cent to 9.1 million in December 2002 from 2.6 million in December 2001.

In contrast, credit card volume rose 40 per cent to 8.4 million from around 6 million.

Spending via debit cards not in tandem with the rise in volumes. The average spend through debit cards for most banks is around Rs 500 per month.