Rising compliance of Point of Sale (POS) terminals to debit cards has increased the usage of these cards as compared to credit cards.

The last two years has seen a vast change in the transactions taking place using both debit cards and credit cards. There are currently 19 crore debit cards in the system as compared to 1.9 crore credit cards. Last year saw the addition of 80 lakh debit cards and on the contrary1 crore credit cards have been withdrawn or cancelled from the system.

Share of debit cards as a part of the total card spend has increased to 30 % in FY 10 as compared to only 17% in FY 08.

According to B Amrish Rau, V-P and country head, First Data Corporation, which has a joint venture with ICICI Bank for point of sales terminals, “Consumers are warming up to using debit cards at merchant location as they perceive it to be a more secured and a hassle-free way of transaction. Moreover, increasingly, it is also used for settling e-commerce transactions.”

According Maitri Kumar, head of marketing, HSBC India, “We focused on debit cards as we observed that a customer using a debit card actively is likely to have a deeper relationship with the bank. And, to engage the customer, we made them offers and ran usage campaigns which have worked well. We have an equal focus on both credit and debit cards as they meet different customer needs.

In an environment where credit limits have been pruned, debit cards are a good option as they give purchasing convenience and access to ready cash. However, credit cards still account for a chunk of transactions and it will still be a long way to go for debit cards to overtake credit cards.”