Cashless economy push is making cardmakers jubilant

Post demonetisation, the plastic cards industry, which was facing tough competition from mobile wallets, is now experiencing resurgence as the whole nation is using cards now.

Reserve Bank of India with the finance ministry is now encouraging banks to push their limits on disbursement of debit and credit cards along with terminalisation of merchant outlets to facilitate card transactions, orders are pouring in from all sectors of the industry for fresh sof smart cards.

"We have seen a trebling of demand for plastic smart cards to be used as debit and credit cards and we are also receiving orders from even smaller banks along with the bigger ones as they want to boost their debit card base as well,” said Deven Mehta, managing director, Smart Card IT Solutions, which produces smart cards for banks and telecom companies, told ET.

Smaller banks like Allahabad UP Grameen Bank, MP Rajya Sahakari Bank have placed orders for plastic cards.

"Allahabad UP Grameen Bank has asked for 1million cards to be supplied within the next 3 months,” Mehta told ET.

Another section that is driving demand for plastic cards is the prepaid cards industry and that is being driven mostly by prepaid payments instruments (PPI) licence holders who also operate in the mobile wallet space.

Companies such as ItzCash, Oxigen and Transerv are seeing a huge spike in demand for prepaid cards, mostly from corporate entities which want to pay their employees through pre-loaded cards.

"We have received orders to the tune of 30 lakh prepaid cards from many small and medium enterprises to pay salaries to their employees along with individuals who are giving these cards to their family members for their use,” Anish Williams, chief executive officer of Transerv, which operates the Udio mobile wallet, told ET.

The demand for plastic card has seen an increased in demand for debit cards over the past two years, driven mainly by the Pradhan Mantri Jan Dhan Yojana which not only mandated bank accounts for every Indian citizen but also tied up with National Payments Corporation of India for RuPay debit cards for those no-frills accounts.

As per RBI data, while the average number of cards being added to the system hovered around the 50-million mark for the years between 2007 and 2014, 2014-15 and 2015-16 saw around 160 million and 111 million cards being added respectively mainly for the Jan Dhan accounts.

"This surge had made us ramp up production capacity by over 200% over the past two years and hence we are in a position to meet the increased demand for plastc cards in the system,” said Sanjeev Shriya, president of the smart card industry body, Smart Card Federation of India, told ET.