Banks focusing on card innovations to compete with e-wallets, UPI

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Banks are innovating card products and strategies to appeal to the new demographic even as cards compete with the fast growth of newer payment modes like the Unified Payments Interface.
Customer behaviour towards cards has changed and people no longer want to carry a bulky wallet full of debit and credit cards, say industry players.
“The payments market is evolving, along with a shift in consumer behaviour. Consumers are increasingly looking for innovative products and services that provide enhanced speed and security combined with ease of use,” said Sanjeev Moghe, head of Cards & Merchant Acquiring Business, Axis Bank.

Private lender IndusInd Bank has introduced a credit-cum-debit card with two chips and magnetic stripes. The card has two separate card numbers, combined into a single plastic card to address the changing needs of customers.
“We have seen an immense interest in the product since its launch. People, nowadays, don’t want to carry multiple cards and this product was created to address that change,” said Anil Ramachandran, head, retail, unsecured assets, IndusInd Bank.

Banks provide solutions that obviate carrying physical cards and industry experts say mobile phones will soon become the most common mode of payment. This trend is reflected in how most banks provide virtual cards, which are digital versions of debit/credit cards. Axis Bank’s Insta credit card is one such example.
While virtual cards can only be used for online transactions, experts say that Near Field Communications (NFC) cards, also known as contactless cards, will be the new normal in a few years. These cards allow a customer to tap her card at a point of sale (PoS) terminal and make the payment without the need to insert the card and enter PIN up to a certain transaction value. However, this requires the PoS machine to be NFC-enabled.

Banks such as Axis Bank and ICICI Bank provide customers the option to tap their phones and make payments by downloading the bank’s ‘Tap and Go’ mobile application and creating a virtual card for payment.

“These evolved ways of banking with virtual and contactless products considerably enhance customer experience and is attractive especially to the millennial customer segment that demand instant gratification,” said Moghe.

NFC transactions account for 2-3 per cent of card transactions in India. The technology will take a few years to pick up but will see exponential growth, said ICICI Bank General Manager and head, unsecured assets, Sudipta Roy.

He added customer journeys like these took time. “Australia, where 85 per cent of card transactions are NFC-enabled, took six years to make that transition. It is also seeing a drop in cash withdrawals owing to the ease of digital payments.”

However, for NFC cards to pick up, there needs to be infrastructure, which will take a few years to build, especially upgrading card machines.

In the meanwhile, banks are leveraging partnerships with players such as Samsung Pay, which allows users of partner banks to load their card on to the Samsung Pay app and make “Tap and Go” payments, using their Samsung phone. Samsung Pay can also be accepted at normal PoS terminals through Magnetic Secure Transmission, which, the company claims, makes it the “most accepted mobile payment service on the market”.

Mobile wallets and the Unified Payments Interface have gained customers through a slew of discounts and offers and cards have deployed the same strategy in the past and continue to do so.

“Customers are more deal-seeking and want cards that supplement their lifestyle. So we provide a bouquet of co-branded cards that give the customers great offers and discounts,” said ICICI Bank’s Roy. 

He added that while co-branded cards like Jet Airways and MakeMyTrip provided discounts, others like Ferrari and Manchester United held an affinity element. 



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