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Monday, May 2, 2011

Cash Vs Card: Card is winning race in emerging markets


Convenience, security and better shopping experience playing key role in making card winner over cash. Electronic payments can revolutionise the way people pay. The increasing benefits of electronic payments worldwide can be seen in their rapid growth across many emerging markets. According to the World Payments Report 2010, non-cash payments in Russia rose 66 percent between 2008 and 2009, while China (+29 percent) and South Africa (+25 percent) also posted large gains. 
While India has seen similar growth numbers in debit cards (+42% in FY2009-10 compared to the previous financial year, cards still account for less than 5 percent of consumer spending.


Why pay by card?

Increasing card usage often depends on increasing consumers’ awareness of the benefits of using them. These include:


Convenience and control: 


Cards allow people to shop and manage their spending without the need to carry cash. Cardholders can choose between using debit cards which gives them the security of knowing there will be no interest payments on purchases or using credit cards for greater flexibility.
  • Greater security
  • Time Saving
  • Enables online shopping
  • More payment options
  • Better consumer control



Cash vs cards – The advantages of electronic payments


This table below illustrates the typical advantages that card payments offer consumers over cash. Not all card products carry the same level of functionality. 

Cash
Debit cards
Credit cards
Budget control
Some
Yes
Some
Replaced if lost
No
Yes
Yes
Monthly statements
No
Yes
Yes
Transaction insurance protection
No
No
Yes
Card and transaction security features
No
Yes
Yes
Reward programmes
No
Yes
Yes
Revolving credit
No

Yes
SMS transaction alerts
No
Yes
Yes

India is already making rapid progress in developing electronic payments. Several industry-leading technology applications are already widely used to improve customer service and security. For example, Indian banks send SMS messages to clients after they have made an ATM withdrawal so that cardholders get confirmation that a transaction was carried out on their account. Value-added applications like this encourage more people to pay with cards.

Ref: indiainfoline.com

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