There was a sudden and sharp decline in the number of debit cards in June 2017: debit cards were down by 86.2 million to 793.83 million from 880.03 million in May, down 9.8%, shaving off most of the increase that demonetization brought in. In fact, card levels are below the January 2017 levels now, although January saw the highest addition in Debit Cards in a single month in recent memory, just as June saw the highest ever decline in debit cards, in recent memory. May and June were tough months for digital payments: the two months combined saw a decline of almost 100M in mobile wallet transactions. Note that the RBI doesn’t publish figures related to number of wallets.
In fact, it’s probably much worse. Here is something to consider:
For the one year period demonetization (from October 2015 to October 2016), India added an average of 10.32 million debit cards per month.
Taking that trend into account, and assuming there was no demonetization, by the end of June 2017, India should have had 821.89 million debit cards.
At the current level of 793.83 million, it is 28.06 million debit cards off the pace.
Was the growth in State Bank of India debit card numbers during Demonetization real?
But this could a one-off instance, but you have to question how much of SBI’s gains in January were real:
- In June 2017: State Bank of India reported a decline of 92.83M debit cards, going to 261.72 million from 354.55 million. All the other banks combined grew the base by 6.638 million. Barclays Bank was the only other bank to report a decline: down 8 debit cards. Eight.
- In January 2017: SBI had reported the single highest growth in debit card users: 45.4M, accounting for 80% of the 56.85M growth that month.
- SBI is back to normal: it remains the single largest issuer of debit cards, accounting for 32.9% of the total number of debit cards issued (793.83M), compared with 40.28% in May (when there were 880.3M cards), before this decline. In December, before the massive increase in January, it accounted for 29.41% of the total number of cards. In January, it accounted for 32.29%. Note that in January, two other banks which grew significantly were Bank of Baroda (up 1.1M cards) and Bank of India (up 1.07M cards). They have continued to grow.
Number of credit are steadily increasing: In June, a total of 31.48 million credit cards were in operation. Between June 2016 and June 2017, India added some 0.62 million credit cards.
Card usage spiked during the months of November, December and January following the demonetization of Rs 500 and Rs 1000 notes. This forced cardholders to use them. But since February, both debit card and credit card usage have been range-bound.
Number of transactions using credit cards grew by 43.5% year on year, while it rose by 115% for debit cards for the 12 month period ending June 2017. In June, total number of transactions through credit cards were 109.47 million while the figure for debit cards was 254.66 million.
Total amount transacted through credit cards — which was Rs 35,483 crore in June 2017 — increased by 48% in the one year period ending June 2017. Amount transacted through debit cards increased by 142% during the same time. In June 2017, Rs 37,524 crore were transacted through debit cards. Note in the chart above that though the amount transacted using debit cards had surpassed credit cards in November 2016, we’re in a situation where amount transacted using credit cards might surpass debit cards again.
Total amount transacted through credit cards went down by Rs 657 crore in June 2017 while amount transacted through debit cards up by Rs 361 crore.
Average amount transacted per transaction using credit cards — which is an indication of how much amount people are willing to spend in one transaction — increased by 3.25% between June 2016 and June 2017. For debit cards, it grew by 12.36% during the same time period.