Cards for flaunting, not use
A study of Indian card users by Edgar, Dunn & Company has found that India has more inactive credit and debit cards compared with other nations while the revenue generated is meagre.india Updated: Apr 30, 2009 02:22 IST
Those shiny rectangular things are a status symbol perhaps, and a likely object for flaunting to show financial muscle.
A study of Indian card users by Edgar, Dunn & Company has found that India has more inactive credit and debit cards compared with other nations while the revenue generated is meagre.
Low card transactions and poor annual fees are keeping the revenues low for Indian card companies at Rs 6,440 per active card, as against Rs 19,950 in UK and Rs 18,870 in Australia, says the study commissioned by global card services firm Mastercard and India Cards Council.
With many cards not bearing annual fees, Indians often keep them inactive, causing losses to issuing entities.
India has a low active credit card usage share at 56 per cent as against 80 per cent in Australia and 75 per cent in Singapore. The frequency of use of active credit cards in India is 14.7 transactions per card compared with 53.1 in the US and 37.8 in Argentina.
India also has low level of active debit cards at 56 per cent versus 90 per cent in Australia and the UK.
The study said that credit losses are relatively high at Rs 3,420 per card against Rs 3,070 in USA and Rs 1,220 in Australia. “The low labour cost in India is keeping the labour-intensive process of operational cost low,” said Lance Blockley, from Edgar, Dunn & Company.
He suggested more spending by banks on background checks and credit worthiness of customers to bring down the credit loss rate.