Indian ecommerce boost triggers customer card usage roost

Banks claim that electronic commerce has been one of the main forces pushing sales and transaction values of credit and debit cards in India, indiatimes.com reports. Soumya Kanti Ghosh, chief economic advisor at SBI, said that, with increased usage of cards, the cost of printing money comes down and banks save on maintaining and manning thousands of ATMs and the trail left after every transaction is more visible, the source cites.

There was a 16.3% increase in the use of debit cards in FY15 from a year earlier and a 21.3% jump in credit cards by volume, according to Reserve Bank of India data. The value of debit card transactions shot up 14% in FY15 and that of credit cards surged 23%. The rise in usage happens also in tier-II and tier-III cities as well and credit cards give them an accessibility and we have seen spends rising, according to Shubhada Rao, president and chief economic advisor of Yes Bank.

Rao of said while cash is still preferred for smallticket transactions, large electronic goods, grocery purchases and household items are bought from ecommerce sites using plastic money. HDFC Bank has issued over 6 million credit cards and over 22 million debit cards and these numbers are growing by about 30%, annually. The bank expects online transactions to grow by more than 70%. 

With e-wallets, or pre-paid accounts, becoming popular, banks are coming up with special offers for their credit and debit card holders. In July, Citibank tied up with MasterCard to come up with Citi Master-Pass, an e-wallet, allowing Citibank debit and credit card customers to shop at more than 250,000 ecommerce merchants globally and there was a 76% increase in ecommerce transactions by Citibank customers from 2013.

The rise of ecommerce in India, along with the increase in internet users and growing smartphone sales, has made banks realise how online transactions will play an integral role in their credit and debit card business. The number of internet users in India exceeded 350 million as of June, 2015, according to a report by IAMAI and KPMG.