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Plastic passion spurs spending spree

Mumbai, Sept. 11: It’s cards over cash and machines over men. That’s how Indians are spending in recent times.

A report by Visa International, the world’s leading payment brand, says card sales (including cash scooped from ATMs) zoomed 198.4 per cent to a staggering Rs 9800 crore in the three months to June this year. That puts India at the top of the company’s growth chart in the Asia/Pacific region for the same period.

With the card rush has come a transformation that is pushing the ubiquitous bank cashier to the sidelines. Even public sector banks have followed the lead set by their private sector counterparts in setting up ATMs.

Retail sales — spending at the point-of-sale — with Visa cards grew 40.6 per cent over the same period last year to Rs 1782 crore. This, Visa claims, is the highest growth rate for any Asia-Pacific market in the quarter ended June.

Indians, known to be quick learners with electronic gizmos and computers, have adapted just as well to ATMs of banks keen to speed up automation of services.

Visa has even struck with those who shunned debts like disease — its debit card brand Visa Electron is expected to be a growth driver. “It’s an ideal product for India and is being widely accepted by consumers,” said Santanu Mukherjee, Visa’s country manager for South Asia.

“The phenomenal growth rates would not have been possible without the support of our member banks and customers in Visa branded products,” he added.

The company expects strong numbers on all parameters — numbers, sales, volume and retail sales. “Our focus on building the acceptance infrastructure and simultaneously increasing issuance and usage in Tier 11 towns and cities through the Visa Area development and Visa power programmes has brought benefits for the whole industry and us,” Mukherjee added.

Visa’s success has been fuelled, in large part, by public sector banks luring customers into debit cards. Plastic money and ATMs are now common place, a far cry from the way people spent only a couple of years back.

Analysts say the trends have been there for some time. A senior official with a PSU bank said debit cards make eminent sense in the Indian context. “In case of credit cards, one has to be certain about customers’ credit worthiness. For debit cards, all you need is a bank account, and it is truly an alternative to cash,” he added.

One can use them only if there’s money in the account, unlike a credit card, where purchases and cash withdrawals are like a loan that have to be repaid on time. The use of debit cards is expected to widen once banks seal deals to share their ATM network, analysts say.

Another reason for rapid growth could be the burgeoning middle class, especially the young, who have started putting a premium on convenience in spending.

Visa’s study comes months after a similar assessment that showed a 45 per cent year-on-year growth in transactions made by overseas card-holders for the week ended May 11.

Behind the number was the tale of how India's tourism flourished even as an endemic stalked the east and guns boomed in the west. Visa, also the largest payment brand in this country, said tourist and domestic transactions are up 45 per cent in mid-May. The number increased from 46,000 in the week to May 11, 2002 to 67,000 same time this year.

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