Page 40 - Banking Finance January 2025

ARTICLE

Are Bank Cards

Going to be a

Thing of the Past..?? Krushna Chandra Mangaraj

Senior Manager Faculty at STC,
Union Bank of India, Hyderabad

The Reserve Bank of India's (RBI) push to enable Unified Payments Interface (UPI)-backed cash
withdrawals from ATMs is likely to cause a severe dent in the usage of debit cards, according to
payment industry executives.

T he Reserve Bank of India's (RBI) push to enable "Also, with the announcement of interoperable card-less ATM
Unified Payments Interface (UPI)-backed cash
cash withdrawal facility, using UPI based authorisation, as
opposed to card and PIN based authorisation, and to allow
withdrawals from ATMs is likely to cause a severe
dent in the usage of debit cards, according to
payment industry executives. Already a preferred mode of activation of UPI via Aadhar OTP in lieu of a debit-card-linked
OTP, the need for debit cards will be further diluted, and debit
payments at storefronts and for small-value online card numbers could likely start to shrink over the next few
transactions, UPI is now set to eat into the debit card's last- years.
remaining bastion of cash withdrawals.Now that the
payments landscape is abundant with innovative digital Cash withdrawals at ATMs are the chief means of usage for
solutions that require nothing but a smart device at hand a majority of debit cards issued in India, with merchant
to make a purchase, many begin to wonder: are debit and payments using debit cards starting to plateau and even
credit cards becoming outdated? seeing volumes falling on a year-on-year basis. In February
2024, the number of debit card-based ATM transactions fell
At Rs 19.64 trillion, the value of merchant UPI transactions to 520 million from 551 million in February 2023.
in April 2024 was well above the value of debit and credit
card transactions at point of sale (POS) terminals. According Independent fintech expert Parijat Garg said that it may
to a recent report, UPI accounts for nearly three-fourth take banks a few months to upgrade their ATMs and other
(70%) of all transaction volumes below Rs 500. systems at the back end to offer UPI-based withdrawals. But
once that happens, the utility of debit cards for a large
Banks' issuance of debit cards had seen significant growth number of customers will practically be gone.
over the last five to seven years, reaching 935 million
outstanding cards as of December 2022. This may now start However, lately, the center-stage position of this payment
to flatten out as a consequence of high UPI use for merchant method is being questioned by some of the main reasons
payments and saturation in card issuances. like:

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