Indian consumers interested in using prepaid cards: Visa survey

Indian consumers are interested in owning and using prepaid payment cards which affords a great opportunity for Indian banks and other financial institutions in this segment, a survey said here.

According to the survey conducted by global payment technology company Visa, which had respondents in six major cities in India, the current penetration of prepaid cards at two per cent gives a huge opportunity for Indian banks in this field.

More than 80% of the respondents like to own pre-paid cards as they enjoy the benefits of cash-less transactions and convenience of carrying such cards instead of money. Easy availability and convenience in reducing ATM visits are two other major factors that attract consumers to prepaid cards, the survey said.

According to Visa's international prepaid products' regional director, Neel Nilakantan, the potential of India in the pre-paid payment card segment is as huge as $93 billion per annum.

Visa's pre-paid card segment including travel cards, pay-roll cards and gift cards are a huge success globally and the company is hoping to replicate the same in India though this sector is at a nascent stage here, he said.

Close to 1,000 companies in India are using Visa prepaid cards for paying salaries which can be reloaded. The company has tied-up with state-run insurer LIC for disbursing annuity benefits to customers through prepaid cards, he said.

The consumers can use these cards without a bank account and withdraw money from ATMs or swipe at Point of Sales (PoS).

Axis Bank has achieved an $1 billion in total volume on Visa Travel prepaid cards, he said.

Citing the increasing penetration of prepaid travel cards, he said that over 40% of business travellers in India are using prepaid cards to pay for business expenses.

With customised variations that are tailored to the customers' behaviour or seasonality, gift cards is another area where Visa expects huge growth. These are non-reloadable cards with a maximum cash value of Rs5,000 for gifting, he said.

Visa is working along with regulators to shape up the regulations for prepaid cards in India, its country head, Uttam Nayak, said.

There are stringent regulations in case of making it available at malls or retail outlets, or in co-branding, he said.