Ecomm platforms supporting UPI; debit cards march towards sunset
"Debit cards have been on a downward trajectory; for small value payments, consumers prefer UPI, and for large value payments, net banking seems to be the mode of choice," said Vishwas Patel, joint managing director at Infibeam Avenues, which runs payment gateway CCAvenue.
That Unified Payments Interface (UPI) has turned into the most preferred payment mode both for in-store purchases and peer-to-peer transactions and is pushing debit cards to the fringes is beyond doubt but what was not so well observed is that the quick emergence of ecommerce is pushing the debit cards almost out of the ring.
The Economic Times has reported that data from the Reserve Bank of India demonstrate that payment through debit cards has reduced by a whopping 50% in September, when it recorded 5.1 crore transactions. In April 2022, the number of debit card payments was 11.70 crore. Incidentally, that was the time when RBI began disaggregating data on payments at ecommerce and offline stores.
Compared in value, the amount paid through debit cards dropped 23% in the same time period. While the amount stood at Rs 21,000 crore in April 2022 it declined to Rs 16,127 crore in September 2023.
In a parallel development, UPI payments made to merchants zoomed nearly 300% in the same time. What was 220 crore in April 2022, shot up to 610 crore in September 2023.
“Debit cards have been on a downward trajectory; for small value payments, consumers prefer UPI, and for large value payments, net banking seems to be the mode of choice,” said Vishwas Patel, joint managing director at Infibeam Avenues, which runs payment gateway CCAvenue.
However, unlike debit cards, credits cards are going through an upswing. Thanks to vigorous push by banks, there are 9.3 crore credit cards in India now. These cards are regularly used by 5 crore unique customers, according to estimates by industry professionals.
The contrasting fortunes of debit and credit cards are visible in the expanding domain of ecommerce too. In ecommerce, credit card rose 22% in September 2023 compared to April 2022. While the number of credit card payments in April last year was 10.7 crore, it jumped to 13.1 crore in September this year. It translated to a value of Rs 92,878 crore in September compared to Rs 65,652 crore in April.
The dominance of UPI in the overall payments scenario cannot be missed. They have crossed the 10 billion mark in both the months of August and September. The number of transactions in FY24 has witnessed steady increase – 8.86 billion in April, 9.42 billion in May, 9.34 billion in June, 9.96 billion in July, 10.59 billion in August and 10.56 billion in September.