Reserve Bank of India data suggests that debit card numbers have plunged by 15 per cent in 2019 hitting a two-year low. The number of debit card has slipped from 998 million in 2018 to 843 million in 2019.
Bankers believe this could be due to the RBI directive on EMV (Europay, Mastercard, and Visa) migration of debit cards from magnetic strip to chip-based cards. Some 155 million cards went out of the market because of this. In 2018 banks reissued cards as per the new directive and cards of inactive accounts were weeded out. Many banks have also enabled their cards for NFC (near-field communication-enabled or contactless cards) for tap-and-go payments.
Federal Bank Executive Director Ashutosh Khajuria said, “At our bank we are seeing a major shift of customers to UPI and other digital payment platforms. Usage of cards at points-of-sale (PoS) and ATM is also declining.”
Banks have also stopped issuing debit cards to customers who have not asked for them, or if their accounts are dormant. Bharat Panchal, CRO, FIS Global, a financial service provider, said banks are saving money by not issuing cards for dormant accounts. He added, “For a bank, it is not prudent to keep servicing dormant accounts. One, the risk of fraud like money laundering increases. Second, there is the cost of maintaining such accounts. So, banks have stopped issuing cards suo motu unless approached by customers."
The reason for so many dormant accounts is that urban Indians change jobs frequently and stop operating the ones they opened during their previous employment, preferring instead to use the new salary accounts at their new place of work.
The fall in the number of debit cards has been cushioned by rural usage of RuPay debit cards via Jan Dhan accounts. The number of such RuPay cards grew 13.5 per cent year-on-year to 296.8 million as of November 2019, increasing debit card holding in poor families in India from 75 per cent to 80 per cent in a year.
|Year||No of Cards (million)|