 "Banks see surge in card usage; demand jumps for PoS terminals")
The per-value transactions of debit and credit cards at points of sale (PoS) terminals has declined after demonetisation, suggesting the country has a long way to move from a cash-based economy to a complete digital one, says a report.
Debit and credit cards transactions at PoS terminals were worth Rs 35,240 crore in value terms in November and Rs 18,130 crore till December 13, compared with Rs 51,120 crore in October. The average transaction at PoS terminals was Rs 1,714 for November and Rs 1,643 for December compared with Rs 2,229 in October, says an SBI Research report.
Reflecting a dip in consumption, the use of debit and credit cards at point of sale terminals fell to a nine-month low in value terms in November and witnessed a sharp decline of 31 per cent over October.
“The per-value transactions declined in post demonetisation, which may be due to less number of PoS machines in the country compared to the demand,” says the report.
It said the country has 1.51 million PoS machines but may need an additional 2 million more if digitisation has to gain traction. The report says looking at the usage of debit cards only on PoS terminals, the numbers are still a long way to go.
As of October, per debit card transaction at PoS terminals was only Rs 1,500, and the number of times transacted was only 1.3. “Thus on an annualised basis, debit card transaction is around Rs 24,000,” the report said.
It said the government should, thus, incentivise the usage of debit cards (there are 740 million debit cards in use) on PoS machines by giving tax concessions such as 80C.
The per transaction value of pre-paid instruments (PPIs), including m-wallets, also declined after demonetisation.
“This decline is possible due to the fact that still customers are not comfortable in using m-wallets either due to lack of security or trust or awareness,” the report said.
The report, however, said the mobile banking transaction data indicates a huge success, with total volumes through mobile banking increasing by 9.7 per cent month-on-month to Rs 1.24 lakh crore in November 2016.
The per transaction value increased by a whopping Rs 17,207 in November from Rs 14,536 in October.
The report said the current size of digital banking, including credit card and debit cards through PoS terminals, transactions through PPIs such as m-wallets, PPI cards and mobile banking was around Rs 170 crore.
This size has to increase from the current level to at least Rs 3.5 lakh crore, which is a conservative estimate of the gap between the actual currency in circulation and the required currency in circulation.
It said there was a need to ensure that per mobile banking transaction increases from the current level of Rs 14,500 to Rs 25,000 monthly. And therefore, to fully utilise the potential residing in the digital channel, banks also need to focus on PPIs, particularly on mobile wallets.
Mobile wallet transactions need to increase from the current level of Rs 3,400 crore to around Rs 10,000 crore going forward.
“This means that value per transaction is increasing significantly from the current level of Rs 475 to around Rs 1,000,” the report said.
