With banks going slow on their credit card business due increasing delinquency rate or people preferring to stay away from loans at the time when companies are turning off employees as a measure of cost cutting, debit card usage in the country has been rising.

Payment for purchases made through the debit card has been outpacing the payments through credit cards. Most of the companies issuing cards have informed that the usage of cards over the current fiscal has increased so far. Even the RBI data claim that there have been increased spending through the cards. But spending through debit cards is rising at a faster pace than spending made through credit cards.

As per the RBI data for the first seven months of the current fiscal, payments made through debit cards are recorded over 80% of the total transactions in the last fiscal and the value of debit cards payments is 84% of the value of total transactions during the entire fiscal year 2007-08. During the period between April and October, the debit cards transactions are recorded for nearly Rs 10,500 crore where as during the entire fiscal 2007-08, these transactions were around Rs 12,500 crore.

On the other hand, the transactions made through credit cards are nearly Rs 40,000 crore as compared to Rs 58,000 crore worth of transactions made during the entire fiscal year 2007-08.

VC & MD of Venture Infotek, Piyush Khaitan said, "The main reason for this increased use of plastic for payment is the spread of debit cards in India."

"Consumers find that debit cards relieve them from the additional chore of drawing cash from ATMs. Now they can spend from the money parked in their bank account directly at the store," he added.

Venture Infotek offers end-to-end card payment processing solutions for 14 banks in India. The data released by the firm showed that during the festive season in October, there was an increase of 55% in the number of card transactions across India compared to the same period in the last fiscal. "It's not only the volume of transactions, but even the value of transactions has risen by around 69% over the same period," said Khaitan.

Moreover at this time of slowdown, even the card issuers prefer to raise the debit cards usage among the customers. Therefore to attract customers to increase transactions made through debit cards, many banks offering benefits of reward points, cash back, discounts and other incentives.