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Online payments through debit card fast becoming preferred choice, finds survey

With growing internet connectivity, the younger generation is increasingly resorting to electronic payments and online shopping.

With growing internet connectivity, the younger generation is increasingly resorting to electronic payments and online shopping. They spend about 16% of their monthly disposable income online for buying groceries, movie tickets, travel vouchers and household items. A survey by Visa, a global payments technology company, says there is a strong opportunity for the growth of debit cards in general as it is the preferred payment product for four in 10 Indian millennials and 47% use it especially for payments above R1,000.

The survey has also identified several drivers for increasing electronic payments in India. Convenience and security are the two most important drivers for online payments. Ability to pay over time, use of unplanned purchases, maximising rewards programme, getting discounts and not having to carry cash are some of the other important drivers for online payments through debit cards. Analysing their transaction behaviour, the survey says about 63% young consumers are transacting online using laptops and 19% on their mobile phones.

The survey also found that 85% of Indian millennials put aside money each month into their savings. Majority of them have a savings bank account compared to a current and check account and a higher than average number of Indian millennials own insurance as a form of investment over stocks and bonds. However, the survey also found that debt aversion is the clear reason why Indian millennials do not have a credit card, coupled with fears of mischarges and fraud. The survey was conducted among men and women in the age group 19-28 in the top 50% of the income distribution range. Uttam Nayak, group country manager, India and South Asia, Visa, said: ?The millennials play a significant role in boosting electronic payments in India. They have an active digital lifestyle and are embracing new payment technologies.?

Even the Reserve Bank of India is vigorously promoting the use of electronic modes of payments over paper-based payments as they are safe, secure and cost effective. ‘The various security measures in card payments system and the guidelines for intermediaries have also contributed to the safety of the system, resulting in the increased use of electronic payments,? says the central bank’s annual report for 2011-12.

Paper-based payments account for 52.4% of the total non-cash transactions in terms of volume, although they account for only 8.4% in value terms. With the growing popularity of mobile banking facility, particularly for small-value transactions, the Reserve Bank of India has raised the limit for end-to-end encryption from R1,000 to R5,000 and removed the transaction limit of R50,000 per customer per day. The central bank has also advised banks to prescribe transaction limits based on their own risk perception.

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First published on: 04-09-2012 at 03:00 IST
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