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 marketThe 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.

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.

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.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.

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 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.

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).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.

Opportunity Areas

Card manufacturing

Card design

Card printing

Laminating

Embossing and encoding

PIN generation

Pre-paid cash services

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.