Analysis on RBI's Report – Retail Electronic Payment Systems

RBI has just released the May'11 monthly bulletin with data on retail electronic payment systems up to March'11.

This data reveals that even though the number of credit cards in circulation has continued its decline from 18.3 Mn cards in March'10 to 18 Mn cards in March'11, the total volume and value of Point of Sale (PoS) transactions through credit cards in FY 2010-11 registered an increase of 13.2% and 22.1% respectively over FY 2009-10.

RBI information also indicates that in FY 2010-11, debit card transactions at PoS increased by 39.3% in volume and 46.5% in value as compared to FY 2009-10. The number of debit cards has registered an increase of 25.2% for this period rising from 182 Mn cards in March'10 to 227.8 Mn cards in March'11.

According to Mr. Sameer Nemavarkar, CEO, Atos Worldline India, which brings together Atos Origin core expertise in hi-tech transactional services, "Banks have been conservative in growing their credit card base and have also been weeding out inactive credit cards, due to which the credit card base has been declining since FY 2008. Despite this decline, the trend shows increasing spends on credit cards. However, it is pertinent to note that spends on debit cards are increasing significantly, at a rate more than twice that of incremental credit cards. In absolute terms too, the growth in debit card spends almost match the growth of spends in credit cards. At this rate, the growth in debit card spends will drive future volumes growth in the country. "

FY 2010-11 witnessed a 15% increase at PoS in the number of transactions per credit card as compared to FY 2009-10. The average ticket size per credit card transaction also saw an increase by 8% during this period.

Debit cards are also growing in popularity. In FY 2010-11, the number of PoS transactions per debit card and the average ticket size per debit card transaction saw an increase by 11% and 5% respectively over FY 2009-10. "Banks having a strong debit card base will stand to benefit from activation and marketing campaigns, especially with the festive and holiday season coming up in the next 3-4 months", added Mr. Nemavarkar.

To understand the card usage pattern across major metros in India (Mumbai, Delhi, Bengaluru, Chennai and Kolkata), a study was conducted by Atos Worldline India.

The research by Atos Worldline India reveals that Mumbai recorded the highest growth in value of credit card transactions with a 44% increase in FY 2010-11 over FY 2009-10. Bengaluru recorded only a 12% increase in the number of credit card transactions, but a 36% rise in terms of value during the same period.

With regards to debit cards, Kolkata and Bengaluru recorded an increase of 44% and 46% respectively for number of transactions and 62% and 58% growth in value of transactions for FY 2010-11 as compared to FY2009-10.

Atos Worldline India also conducted a study to analyze card usage across key merchant categories.

"Consumers are increasingly swiping their credit and debit cards across merchant categories. The value of debit card transactions, however, has increased at a much faster pace than credit cards in FY 2010-11 as compared to FY 2009-10", concluded Mr. Nemavarkar.

Cards swipe Gold on Akshaya Tritiya

111% increase in value of card transactions across India. 500% increase in Jewellery outlets alone.

Akshaya Tritiya celebrated across the nation on Friday, 6th May, witnessed a record number of shoppers making a beeline to jewellery shops, besides supermarkets and malls. With varied choices and discounts to avail, retail outlets made great business on the auspicious day.

According to Atos Worldline India, which brings together Atos Origin core expertise in hi-tech transactional services, the festival saw card-based transactions soaring as well.

With Akshaya Tritiya and commencement of the wedding season on Friday last week, value of card-based transactions across the country rose 111% above average. Amongst the metros, the shopping impact was most visible in Chennai. Here, the number and value of card transactions increased by 31% and 128% respectively. In Bangalore, the number of card transactions rose by 15%. However, the increase in the value of transactions was a phenomenal 104%.

According to Mr. Sameer S Nemavarkar, CEO Atos Worldline India, "On Akshaya Tritiya, not only did Chennai and Bangalore shoppers splurge heavily at jewellery outlets, supermarkets and malls, but the average ticket size of customers from Mumbai and Delhi increased by 53% and 48% respectively as well. This means the overall retail business across India witnessed a boom."

This rise can primarily be attributed to the number of customer footfalls at jewellery shops across India, even though gold prices have touched new heights.

"There was an astounding 500% average increase in the number of card swipes and value of transactions, across jewellery outlets", added Mr. Nemavarkar.