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The utility of debit cards is expected take a hit as more and more people across the country prefer the Unified Payments Interface (UPI) platform, according to a report published in The Financial Express (FE).
The latest decision by the National Payments Corporation of India (NPCI) to allow prepaid payment instruments to be a part of the UPI ecosystem will attract even more users to the platform, experts believe.
Amit Tyagi, CEO of Payworld, was quoted in the report as saying, "Earlier, debit cards were the only channel for you to spend money online if you wanted to spend using your bank account. Now that there is UPI, those access channels are changing with additional data security available on these channels. I think debit cards usage will definitely be on the downslide."
Data available with the NPCI shows that UPI transactions rose by 66.4 per cent year-on-year to reach 7.5 billion in February. Additionally, transactions in March also registered significant growth.
On the other hand, debit card transactions have fallen 20 per cent year-on-year to 220 million, according to data from the Reserve Bank of India (RBI).
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A variety of reasons are responsible for the decline in debit card usage. Notably, UPI is available on mobile phones and has done away with the need to always carry a card.
The expert further added that a big chunk of debit card transactions has gone to UPI. Remembering the personal identification numbers (PINs) of all debit cards may also be one of the reasons that makes using UPI a simpler method of conducting transactions, he said.
While it is clear that a lot of debit card users are increasingly using UPI, it remains to be seen if UPI can replace debit cards altogether.
