Post demonetisation, debit cards have replaced credit cards in the market

The demonetisation move by the Indian government has resulted in people shifting their priorities towards debit cards as compared to credit cards, making the former the primary mode of payment.

Before note ban, debit cards accounted for only 42% of the total card spend, and the contribution has now jumped to 60% after demonetisation.

In case of small public sector lenders like Oriental Bank of Commerce and Punjab & Sind Bank, usage of cards has gone up nearly five times since November last year, with debit card transactions trebling in December as compared to October 2016, says ET.

Also read: Tax collections will exceed Rs 17 lakh crore, despite demonetisation: Arun Jaitley

Before demonetisation, in October 2016, public sector banks registered transactions worth Rs 10,893 crore from their 61.7 crore debit cards, while private and foreign banks registered transactions worth Rs 11,048 crore even with a much smaller number of debit cards, viz. 12.25 crore.

However, in January 2017, these numbers went up to Rs 29,339 crore and Rs 19,664 crore worth transactions, for public and private banks, respectively.

Also read: Still finding it hard to get cash at ATMs? Don’t be surprised, people are still hoarding notes

Talking of the number of transactions, for every 100 debit cards in circulation, there were only 19 transactions in the month of October. This went up to 54 transactions in the month of December; however, it dropped to 40 in January 2017.

As per industry experts and bankers, if debit cardholders use their cards even once a month on an average, debit cards will contribute 80% share in total transactions.

(Image source: Indian Money)