Is the growing digitalization in India marking the end of debit cards? These plastic cards made its entry into the banking system for the first time in the year 1966. But several banks figured out the usage of debit cards only by late 70s. It took more than a decade for the debit cards to gain popularly; in 1990, about 300 million transactions were carried out using debit cards, and it increased to 37.6 billion by 2009 worldwide. In India, the debit card usage has gone up to 846.7 million as of January 2018, and RBI states that about 28.72 million debit cards were newly added between January 2017 and January 2018.

The State Bank of India has intended to bring down the ubiquitous usage of these plastic cards to pave way for the other digital modes of transactions. On this account, SBI Chairman Rajnish Kumar states, “...it is our wish to eliminate the debit cards, and I am sure we can eliminate them." He further stated that at present, about 90 crore debit cards and three crore credit cards are operating in the country and even pointed out the banks’ Yono platform as the other digital solution to replace the cards.

Debit cards usage was tremendously high post the demonetization in November 2016, as the cash flow in the country was restricted. But in the following year in November 2017, the debit card spike saw a reduction due the unavailability of cash in the ATMs and the evolving digital transaction solutions. The digital transaction solution such as SBI’s Yono, UPI, Mobile wallets, Internet Banking, Mobile Banking, and more, yields more benefits as compared to the cards which includes payments of utility billing, 24/7 services availability, various discounts and coupons on certain transactions. This system also holds the record of every transaction made by the user, this transparency and accountability assists the users to track and restrict their unnecessary expense.

Government Benefits through Digital Payments

When the transaction is carried out digitally, it is recorded and can be easily monitored. These records of transaction made by any individual or merchant when monitored can avoid the occurrence of illegal transactions. The restricted use of cash flow and increased digital transaction can help the government to cut down the black economy. This digital transaction’s record further restricts the customer and merchants to transaction, thus every customer will be receiving the bill on any purchase, in turn all the merchants are bound to pay the taxes to the government. This will considerably increase the country’s economy.  Increased digital economy can enhance the job opportunities in new market and also in the existing sectors; this would address the prevailing unemployment problem in the country. Furthermore, the digital economy would lead to the e-governance, by making all the important certificates and documents available online, for an easy access.

According to the World Bank, “Nearly a billion Indians are still not able to tap the benefits of a digital economy.” Thus to achieve the better economy and to embrace the digitalization at the earliest, every individual must opt for digital payments even for the simple expense.

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