Number of debit card transactions rises 272% over the past five years; credit card usage growth remains at 85%

Despite the phenomenal growth in transactions, the number of annual transactions per user for debit cards is still low compared with credit cards. In terms of total value of transactions also, credit card spends are higher than debit cards

Statistics released by the Reserve Bank of India (RBI) show a clear shift in the use of plastic money. Indians, especially those who are not big spenders, are increasingly eschewing credit cards for debit cards. Data shows that the number of debit cards issued by banks was ten times higher than credit cards.

However, when it comes to the transaction value, spending on credit cards continued to be twice that on debit cards. This would suggest that big spenders see a lot of value in using credit cards.

Over the past five years, debit card usage both in terms of number of transactions and growth in value has outstripped credit card spending by a huge margin. The number of debit cards issued has risen 265% to 18.2 crore while the number of credit cards have increased by a mere 5.5% to 1.82 crore from 1.73 crore cards.
In terms of total number of transactions, debit card usage is also higher than credit cards. Between FY06 to FY11 (provisional), the number of transactions for debit cards grew 270% to 17.02 crore from 4.6 crore. During the same period, the number of credit card transactions increased by 50% to 23.4 crore from 15.6 crore.

Over the past five years, the value of transactions for debit cards rose 355% to Rs26,418.10 crore from Rs5,891.1 crore, according to RBI data.

The total transaction value for credit cards, as we said earlier, is significantly higher, but the growth is slower - it increased by 85% to Rs62,881.80 crore in FY11 from Rs33,886.5 crore. In India there are 1.83 crore credit cards, excluding those that are withdrawn or blocked, while there are 18.2 crore debit cards.

While the growth of debit cards compared with credit cards is extremely strong, the numbers may have been higher if there was a larger acceptance of debit card payments by merchants or vendors. There are many vendors in India and abroad who still prefer a credit card payment to debit card payment.

For instance, multinational Dell, which sells computers and laptops, does not accept debit cards. A Dell sales representative claims that the issue is related to delay in payment for debit cards. He said that the company receives credit card dues "much faster".

The difference between credit and debit card transactions substantiates the vendor's claim. While the number of transactions per credit card per user is about 12.8, the same for debit cards stands at a poor 0.94 transactions per annum.

Earlier in May, speaking at a Moneylife Foundation seminar, an official from the RBI said that about 80% of credit card users in India do not pay any interest to banks and make their full payment within the credit period facility (

Interestingly, statistics for the coming year may throw up more surprises. The recent permission to allow mobile transactions and micro-payment systems may be the next big game-changer. At least seven new companies are all geared up to offer small value transactions through e-wallets or mobile phones. The performance and security of these transactions could transform the way Indians shop or pay for smaller value transactions in the coming years.




7 years ago

Indian Govt is ready to toe USA on its nuclear policy whereas it fails to note a very positive imitable policy on billing by shoppers. Not even a safety pin is sold without bills. It should be made mandatory for all shops with a turnover of more than ten lakhs annually to keep the swiping machines for debit cards. This has another side benefit of lesser currency movement and reduction in the risk of fake currencies' circulation.

Will apologise unconditionally before SC: Tatas

New Delhi: The Tatas today said they would apologise before the Supreme Court for the "unfortunate error" in filing documents that were referred to have been placed on record in the Delhi High Court, reports PTI.

"Our lawyers are filing an application to tender an unconditional apology to the Honourable Court," Tatas said in a statement within hours of their lawyer, after being questioned by the government counsel, offered to withdraw the documents.

Earlier in the day, the government had put a question mark on the document filed by Tata Power saying that contrary to the claims of the company the papers are dated much later than the dismissal of its petition in the Delhi High Court.

Tata Power had challenged the Centre's nod to allow Reliance Power on use of coal from captive mines for the Sasan power project.

At the same time, the Tatas criticised the Centre saying "Government of India and Reliance Infrastructure (R-Infra) respondents instead of arguing the case sought to stand on an unfortunate error which had crept into the application filed by lawyers for putting record few additional documents which inadvertently refereed to documents placed on record in high court".

Tata Power had earlier challenged a decision by an empowered group of ministers to allow Reliance Power, and not R-Infra as referred in the Tatas' statement, to use coal from the captive mines for Sasan project in Madhya Pradesh for other projects.

"These documents, which have been downloaded from the website of the ministry of coal, only amplify our case that there was an out of turn allocation of large amount of coal made by Union of India to R-Infra's other projects, though this coal was meant for exclusive use of Sasan ultra mega power project (UMPP) in the first place," the Tatas' statement added.

Later, Tatas revised the statement saying the dispute is with Reliance Power, and not R-Infra as referred in the first statement.

The statement further said that the documents show that there were more than 700 applications of coal linkage/captive coal mines that were superseded in the process by the government, including many applications made by projects to be set up in the state of Madhya Pradesh.

Tata Power's petition was earlier dismissed by the Delhi High Court, which said that the company had no locus standi to file this petition and it was not maintainable.


Finmin to set to announce new tax norms for foreign firms

New Delhi: The finance ministry today said safe harbour rules — a set of norms that would enable the income tax (I-T) authorities to accept without scrutiny the tax returns by the Indian units of foreign companies — would be soon put in place, reports PTI.

"Safe harbour rules are at an advanced stage of consideration. I can't share how the guidelines are going to will be a very favourable programme... we are working on it and it will be in place as early as possible," Central Board of Direct Taxes chairman S S N Moorthy said at an Associated Chambers of Commerce and Industry (Assocham) seminar here.

He said the norms would be taxpayer friendly.

The Central Board of Direct Taxes (CBDT) has set up a committee to formulate rules for the safe harbour provisions on transfer pricing returns.

Transfer pricing refers to the price at which one arm of a company, usually a multinational corporation, transfer goods or services to another division of the same organisation in order to calculate each arm’s profit and loss separately.

The committee comprises senior tax officials and representatives of trade and industry as well as Institute of Chartered Accountants of India (ICAI).

Its objective is to set conditions under the safe harbour rules to facilitate acceptance of a transfer pricing return without scrutiny.

The committee is expected to set an acceptable margin which would act as a benchmark for the industry.

Me Moorthy also said the Direct Taxes Code bill (DTC) proposes General Anti Avoidance Rules (GAAR) to prevent abuse of double taxation avoidance agreement by some.

He assured that GAAR would be implemented in a very modest, responsible and tax friendly manner.

The CBDT chairman also informed that DTC bill also proposed to bring public sector units under the ambit of Advance Rulings and Dispute Resolution (Authority) to resolve tax disputes.


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