Visa bets on debit cards in India, Asia-Pacific

By Our Special Correspondent

MUMBAI, JULY 10. Visa International, the leader in the payment services industry in India, is planning to reach the target of more than 20 million electronic cards in the next five years, which will give them a two-thirds market share in the country.

``While credit cards will grow to 10 million from 2.67 million now, the debit cards will grow faster for us and reach the 10 million mark in the next three years,'' said Mr. James Murray, Executive Vice-President for Southeast Asia and Greater China. He said Visa expected India to have a total base of 15 million credit cards in the next five years, but the growth will be much more in the debit card area, which is currently growing every year at 260 per cent.

The company took just two years to reach the five lakh mark for Visa Electron Debit cards in India while to reach the same figure it took more than seven years for credit cards. Mr. Murray estimates that in the next three years there will be more debit cards than credit cards in India.

Mr. Murray said that the growth in debit cards was expected because, while there were only 15 to 20 million people who were credit worthy, over 200 million people have some sort of a savings account in India and can be issued debit cards. ``The banks are also satisfied with issuing debit cards because it is more cost effective. For example, it costs the bank Rs. 10 when a customer visits the bank branch, Rs. 4 when he visits the ATM but only Re. 1 when he uses his debit card with any merchant. This can lead to a lot of cost savings and better services for banks,'' Mr. Murray said.

Visa has recently tied up with UTI Bank, the Standard Chartered Group, HSBC and BNP Paribas for issuing debit cards. Two years ago HDFC Bank and ICICI Bank launched the Visa Electron Debit card. Already 20 per cent of Visa's total card spends of Rs. 4,700 crores come from debit cards. ``Debit will be the biggest change in the payment card industry, not only in India but in the Asia Pacific region itself. There are 42 million debit cards in the region now and we expect it to reach 58 million in the next year. The potential for payment cards in India is tremendous since the usage is only one per cent here while it is 10 per cent in the Asia-Pacific region,'' he said.

Visa is also looking at new growth areas, both technologically and geographically. The company plans to increase acceptance in Tier II and Tier III cities and is engaged in a pilot project. Said Mr. Murray, ``our real competitor is not any bank, but cash. Cash is fundamentally inefficient. In India 99 per cent of all commerce is being done through cash. Even if we shift it to 5 per cent through payment cards, imagine what it would do to the economy in terms of making it more efficient. We need to work with more banks and people. We need to come up with more channels and more merchant establishments and we are trying to develop these areas.''

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Section  : Business
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