Just when it appeared that the number of debit cards in India would touch a new high of one billion in circulation last year, it saw a 15% downfall and hit a two-year low to 843 million cards in circulation as of October 2019.
The major downfall came after the Reserve Bank of India (RBI) mandated EMV migration from magnetic-strip to chip-based cards. Close to 155 million cards went out of the market, said an ET report.
In 2018, most public-sector and private banks had blocked the magnetic stripe cards. This led to the weeding out of inactive accounts.
Besides, the banks also stopped issuing cards for dormant accounts on its own. Several zero-balance salary accounts turn dormant after some time as salaried employees change jobs very frequently. As employees do not operate their old salary accounts due to which these accounts become dormant, as per the banks.
The banks have also stopped issuing cards suo motu unless approached by the customer for two reasons: the risk of fraud like money laundering and the cost of maintaining such accounts, added the ET report quoting a CRO of a financial services provider.
Banks attributed the rise in dormant accounts to job-hopping by salaried professionals.
The number of debit cards could have further slipped had it not been a rise in usage of debit cards in rural India via Jan Dhan accounts. As of November 2019, Rupay cards used by Jan Dhan account holders grew 13.5% year-over-year to 296.8 million.
Between September 2018 to September 2019, the number of transactions using credit cards at POS terminals grew by 29.8% year-on-year, while it increased by 14.4% for debit cards for the 12-month period. In September 2019, the total number of POS transactions through credit cards was 179.5 million, while the figure for debit cards was 414.9 million.