Reserve Bank of India (RBI) Governor Urgit Patel has his sights set on India becoming a cashless economy – a move he believes will put his country on par with more developed nations.
“Leapfrogging” into that space requires the use of debit cards and digital wallets, Patel says. It’s a move the leader believes will make transactions cheaper and easier.
Already, police stations in Pune – India’s ninth most populous city – have adopted a cashless policy. The stations will no longer accept cash payments for traffic violations or securing police escorts. To further this shift away from cash, a new government-managed mobile payments app has rolled out in India. The app offers simple, direct connections to consumers’ bank accounts, enabling money transfers, person-to-person payments and purchases.
Of course, urging citizens to use debit cards and digital wallets will be only a small part of the battle. Merchants, too, will have to do their part. There are about 624 million debit cards in circulation in India but only about 10,000 terminals on which those cards are accepted. With 94 percent of debit cards in rural India and 95 percent of these terminals in urban India, an enormous gap exists between having the plastic and having the inability to use it.
The call for less cash, more plastic is getting louder in other countries, as well, especially emerging ones. In fact, those markets present the biggest growth opportunities for debit, despite the fact they can be unpredictable and challenging to navigate.
One recent study showed the Middle East and Africa, along with Asia-Pacific, were the fastest-growing regions for payment cards in 2015, with card volume increases of 13 percent and 10 percent respectively.
With roughly 2 billion people unbanked globally, there is a significant portion of the population that lack access to financial services. Financial institutions are moving into regions with large unbanked or underbanked populations to leverage those markets. As they do, more checking or similar accounts are opened, further accelerating the global growth of debit and other payment cards.