A gradual shift of transactions from cash to cashless, loyalty shaping up as an effective marketing tool and an evergreen demand owing to the regular wear-and-tear, standard plastic cards offer a lucrative opportunity for consideration
The 1990s witnessed heavy wallets filled with paper money and coins.
With time, the weight was accounted for by the number of plastic cards that became preferred over cash. The use of these cards became so predominant that the volumes have become an industry in itself. Cards have made our lives unthinkably easy. And it is not just our debit or credit cards, but also several loyalty cards for availing discounts at a retail outlet or for swiping at the petrol pump or for the membership of a bookstore or any other club—the list goes on.
The plastic card market
The Indian plastic card market can be classified into various categories. Dominated by the banking sector, requirements include commonly used credit as well as debit cards. There are other premium cards as well, which banks issue but only to select customers. According to industry figures, there are around 135 million plastic payment cards, which include all debit and credit cards, in circulation. The number of debit cards clearly dominate credit cards, but in parallel, an increasing number of youth shopping with facilities like interest-free fifty-two-day extension of credit by banks, promise a slow but gradual increase in credit card usage in the coming times. It is believed that there are 27.5 million credit cards in circulation.
| DARE/quick points |
| Largest consumption: Banking sector Other major sectors: Airlines, hospitality and retail |
| 135 million: The number of payment cards in circulation in India |
| 210 million: Estimated number of payment cards by 2010 169 million: Will come from debit cards 40 million: Will come from credit cards |
| 27.5 million: Estimated number of credit cards in the country US$ 14.5 billion: The worth of the above |
| 100 million: Multipurpose pre-paid cash card users in India, generated in last five years 100%: Annual growth rate for pre-paid cash cards |
| 550,000–: Frequent flyer base of Air India, each of whom has been issued a frequent flyer (loyalty) card. |
| 120 billion: Worth of oil sold by Indian oil every year through plastic cards 1.1 million: Of the above are co-branded cards with Citibank |
| 1.2 million: Pre-loaded debit cards |
| Recession-hit German brothels are now offering discount and loyalty cards too |
The big driver for plastic in the banking sector is debit cards. Banks for some time now have been pushing customers away from branches and toward ATMs and call centers, particularly for low-value transactions in order to keep their costs down as their business scales. This is what has driven the increase in debit cards. If you have been using ATMs for some time now, you will have seen a change in profile of ATM users, from the affluent and middle classes to the less affluent and even laborers.
| Types and uses of cards |
| Magnetic swiping banking cards (credit cards, debit cards, insurance cards) |
| Loyalty cards (promotional cards, membership cards, discount cards etc) |
| New mobile connections (use-and-throw plastic card attached with a SIM card) |
| Cash cards (ItzCash cards, Done cards) |
| Corporate identification (electronic swiping cards etc) |
| Smart cards carrying information (driving licenses, green cards, passports etc) |
| Cash-cum-loyalty cards (i-mint) |
In a country of a billion people, there are 27.5 million credit cards. Even if we assume that each person has only one credit card, this is 27.5/1000 = 2.75% of the population. Obviously, the growth opportunity for credit cards is also tremendous. The estimated number of payment cards in India by 2010 is 210 million, out of which 169 million would be debit cards.
The average life of these cards is considered to be three years. “Banks are fairly prompt in redeeming credit/debit cards once they become useless owing to regular wear and tear. Such redemption is usually done at a nominal charge of Rs 100 per card,” says Bhavesh K., research analyst (banking sector), Sharekhan. This means that there exists a perennial demand for cards, apart from the regular growing requirements in the industry.
In a recent development, ICICI Bank along with mCheck—a mobile payment solutions provider—has announced that it will be issuing mCheck VISA credit/debit cards to its customers. The card can be used to perform transactions like bill payment, payment of insurance premiums, money transfer and buying air tickets against the customers credit/debit card account. Hence, more of such customized electronic cards are expected to come up and would be a driver to look forward to.
The telecom sector also demands heavy requirements of plastic cards. Every new connection sold sells a plastic card along with a SIM card attached with it. The plastic cards in this case are use-and-throw ones. Speaking in figures, India has a wireless connection of base of more than 300 million.
| Opportunity Areas |
| Card manufacturing |
| Card design |
| Card printing |
| Laminating |
| Embossing and encoding |
| PIN generation |
| Pre-paid cash services |
Then there are loyalty cards that can be either membership cards, exclusive discount cards or privilege cards. Loyalty cards enable certain services, like a membership discount or other perks to loyal customers that are not offered to infrequent shoppers. The concept of loyalty cards is at a nascent stage and growing. “Most of the loyalty cards are discount cards in India, whereas [usually] a loyalty card is not just merely a discount card. It offers various other privileges to its customers that are not available otherwise. Like an airlines loyalty card offers a status of being a preferred flier, access to VIP lounges across airports, free magazines and other publications and many other services,” says Rajesh Ghatge, executive director and COO, 141 Sercon.
Retail is an emerging sector issuing loyalty cards to attract customers. Hence, a loyalty card from a bookstore can offer discounts on purchases, space for unlimited reading hours and other rewards. On the part of companies, it is noticed that they are using loyalty cards as a strategic marketing tool to lure the customers into repeated purchases from the same brand(s).
For example, some ICICI Bank debit cards are co-branded with Hindustan Petroleum (HP), while some Citibank cards are co-branded with Shopper’s Stop. The benefits of co-branding are two-fold. From the issuer’s perspective, the cost is shared amongst the brands participating, along with an increase in their reach. For customers, the number of offers increase with two or more than two brands on a card, while brand attraction and loyalty builds up trust. Hence, a loyalty card holder of a multiplex would like to make repeated visits as he or she is offered many other services in the form of hospitality beyond the movie watching experience. This trend is picking up as both customers as well as companies are maturing with time owing to the acceptance of these privilege or loyalty cards.
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written by Plastic Cards, February 13, 2011
written by plastic card, December 09, 2010
written by Plastic Cards, October 20, 2010
written by : scratch card, , September 06, 2010
written by bhuvan, January 27, 2010
I am from Chandigarh and would like to start my own business and i feel that manufacturing plastic cards is a good business with great opportunities, so please guide and help me.
I'll be waiting for your mail.
Thank You
Bhuvan Bhalla
written by Mazhar Shah, October 17, 2009
written by Prasoon Gupta, August 05, 2009
Kindly let me know your email id where I could get in touch with you on this.
Prasoon
written by Murali Chakravarthy, July 11, 2009
yes, ATMs and cash management are going to play an important role in future, both for the baking sector and the people. It is really a big leap in the history of ATMs with the linking of all the Bank's ATMs to a central network and making the withdrawals free from any ATM. I think, RBI has set the right trend in the right direction. Still lot more is there to be done in spreading the area net work and see that these ATMs are rachable in the rural areas and where ATM numbers are a few.
I am graduate, aged 57 years, having an experience of 30 plus years in managing an SSI, 7 years in a cash management company taking care of the operations and admin for two years in that. Now would like to get involved in identify the weaker areas ATMs/cash management - like locations, operations, etc.,and would like to get involved in manpower training and motivating them in the right direction. If any suitable opportunities are available, I would be interested in filling up the slot. Please respond to my given email id
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