India Cards Council (ICC) and MasterCard Worldwide announced the latest findings of the ICC-EDC Benchmarking Study at an Industry forum. Edgar, Dunn & Company (EDC) is the independent global financial services and payments consultancy firm engaged to carry out the study. Released in 2H2010, this study is second in the series of the ICC-EDC Benchmarking Study, first published in April 2009. The current study measures the performance of the banking industry’s payment card programs, across its credit, debit and prepaid verticals. This comprehensive benchmarking study provides a definitive perspective of the Indian card industry. It provides crucial information for the card operations team in developing an effective business plan while identifying potential business avenues. The study and its accompanying reports do not represent MasterCard financial performance release.
Based on the latest findings, Lance Blockley, managing director of Edgar, Dunn & Company said, “It is evident that Indian debit cardholders are becoming more aware and comfortable with using their debit cards to make electronic purchases at merchant outlets. Although there has been significant growth in debit card usage in the country, the overall debit card activity in India remains behind that of the United States and Europe, indicating further growth potential,”
“EDC appreciates ICC and MasterCard customer banks for placing significant focus on research, seeking to understand consumers which have helped tailor the cards category to suit the needs of consumers,” said Lance Blockley. “The increase in average spend, transactions and cross border activity is clearly seen as one progresses from the Standard to Gold to Platinum cards and this trend indicates that people are getting the card that matches their capabilities,” he added.
Speaking at the occasion, T.V. Seshadri, vice president & general manager, South Asia, MasterCard Worldwide commented, “The ICC-EDC Benchmarking Study is part of MasterCard’s initiative in creating platforms steeped in the comprehensive understanding of consumers’ needs and preferences. The report provides value to our customer financial institutions by bringing research-based knowledge to identify best practices and innovation that in turn informs business approach and technology. MasterCard recognizes India as one of the leading hubs for innovation and that there is tremendous potential for home-grown solutions in the electronic payment space, strongly encouraged by the Reserve Bank of India. We would like to be part of this growth story and the ICC-EDC Benchmarking is a step in that direction.”
A summary of the findings:
Debit Cards:
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The activity level on debit cards has increased significantly over the last year with more cards becoming active (i.e. being used at an ATM and/or merchant Point-of-Sale-POS).
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There was a 400% increase (YoY) in the average number of transactions per active debit card at POS.
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It is encouraging to note that this increased usage of debit card at POS has not negatively impacted ATM withdrawals, which also recorded an increase of 34% in the average number of withdrawals per active debit card on an annual basis
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Average transaction value for both POS and ATM withdrawals remain relatively unchanged between 2008 and 2009
Credit Cards:
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While witnessing a decline in the number of credit cards on issue, there has been a 28% growth (YoY) in the average number of transaction per active card.
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Average Transaction Value remains unchanged.
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Compared to the other markets like the US and Europe, s Indian credit cardholders are generating higher levels of international spend.
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Indian Card-Not-Present (CNP) transactions are reporting higher volumes compared to its international peers.
Prepaid cards:
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49% growth on yearly basis in total transactions per active card.
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Emerging as the preferred payment management tool for foreign travel.
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Used extensively for cash withdrawals at international locations.
The ICC-EDC Benchmarking Study involved 14 banks in debit card, 9 banks in credit card and 4 banks in prepaid.