The Prevalence of Card based Payments In India’s Financial Evolution.

Introduction of Card based Payments

The Financial Sector of India played a huge and efficient role for shifting our Economy from Cash economy to Card based payments. The first card-based payments i.e. (credit cards) were introduced in the late 1980’s and by 1987 ATMs were introduced . In the early 1980's the topic for debate was card vs cash based banking payments .

Note: The First Card based bank payments were introduced in London & New York in late 1960’s and 1970’s.

Lets explore the shift in financial banking payment methods from Cash based economy to Card based economy to UPI based economy.

In the year 2010 Digital Wallets were introduced like Oxigen Wallet, MobiKwik ,Paytm Wallet . Since 2014-2015 wallet system gained importance due to popularity of mobile internet and smart phone adoption. Card based payment system was still in the scenario in spite of increase in popularity of the Digital Wallets.

Introduction of Wallet based Payments

Next scenario there was a time when we use to debate about Credit Card vs Debit Cards till the year 2016. Since then we have developed such an economy where we now discuss about the importance of card altogether. Whether the card system in banking sector and in our daily lives is losing importance or not. Why?

Because in the year of 2016 Indian Government introduced BHIM UPI (Unified Payment Interface).

1. P2P (Peer to Peer) : Sending Money from one person bank counts to another person’s bank account .

2. P2M (Peer to Merchant) : Payments made to service or business providers .

Introduction to UPI payments in India

Reason for declination of card-based banking payment

Since then there is a decline in card-based banking payment usage altogether. The basic reason for the declines are listed as :

1. UPI and QR codes payments are convenient and faster. Tap to Pay phones are gaining popularity since 2023

2. UPI payments are preferred by merchants due to low transaction cost as compared to online card-based payments

3. Younger generation ditching the traditional cards and payment system to some extent.

1. USA & Canada: Card Usage very high especially Credit cards.

2. Europe: Card Usage very High especially Debit Card

3. East Asia: Skipped the card-based payments almost entirely except Japan and South Korea

4. Southeast Asia: Skipped the card-based payment in Indonesia, Vietnam & Philippines but high card usage in Singapore & Malaysia

5. Middle East & Africa: Urban centers showing increase in card-based payment usage but rural area it’s not as prevalent.

" Card based payments vs Non Card based payment :World Scenario "

The Card based payment system are still prevalent for international travel, credit building, rewards, lounge access, EMI options.

The Card based payment system was the medium for which today we have developed a digital economy from a cash-based economy.

If there had not been these card-based payment systems introduced then there would not have been todays Digital India.

Prevalence of Card based Payment system

Image credit : ChatGPT

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