Payment Card Industry Survey 2007

8/6/2019 Payment Card Industry Survey 2007

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INDUSTRY SURVEY

PAYMENT CARD INDUSTRY 2007

Research


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Contents Page No.

Foreword _____________________________011. Credit Cards __________________________ 02

2. Debit Cards___________________________ 09

3. ATMs _______________________________ 12

4. Merchant Establishments ________________15

5. Key Trends __________________________ 17

Abbreviations _________________________19

COPYRIGHT INFORMATION:All information contained in this report is the property of Venture Infotek Global Private Limited. Reproduction of

information, tables, charts etc is permitted subject to the condition that the source is acknowledged as follows:Source: Venture Infotek Research

Additional copies:This report can be viewed on our website: www.ventureinfotek.com/IndustrySurvey.htmAdditional copies of this report can be requested by sending an email to [email protected]

The data presented is based on feedback from relevant people in various banks. It has not been validated withactual records. Wherever published information was available it has been used. The views expressed by thebankers might be their own and may be coinciding with that of the Bank. The analysis done is purely on the datacollected and the views expressed thereof are on the basis of the analysis. In certain cases, where data was notforthcoming, best effort estimates have been used.


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Segment Performance

Credit cards have been in India for well over two decades. Over the last five years though,they have maintained consistently high growth rates. There has been an impressive growthrate of around 41 per cent this year in terms of number of cards in force.

The rapid growth in the subscriber base can be attributed to the aggressive issuance ofcredit cards by top 5 players in the industry. The industry has seen the private sector player,

ICICI Bank, surge aggressively ahead, surpassing the established MNC banks like Citibankand Standard Chartered. Now there are 7 banks each having a portfolio of over 15 lakhcredit cards each.

Chart 1: Credit Cards Issued

2

Growth in Credit Cards Issued

48.65 60.68 76.08100.65

141.05180.08

254.59308.43

050

100150200250300350

3 1 . 0 3

. 0 1

3 1 . 0 3

. 0 2

3 1 . 0 3

. 0 3

3 1 . 0 3

. 0 4

3 1 . 0 3

. 0 5

3 1 . 0 3

. 0 6

3 1 . 0 3

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3 1 . 0 3

. 0 8

Year

N o

. o f C r e d i t C a r d s

Cards in Lakh

Estimated


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Market Share

Chart 2: Comparative Market Share of Individual players

ICICI Bank emerged as the leader in the credit card issuance category for the year, with itscontinued aggressive strategy, registering a 56 percent growth rate. ICICI Bank crossed the80 lakhs mark in terms of credit cards, galloping ahead of its other contemporaries.

ICICI Bank holds 32% market share followed by SBI cards and Citibank, both at around14% and 13% market share.

Estimates for the year 2008-09 indicate a similar surge and aggressiveness. The credit card

numbers are expected to cross 300 lakh by March 2008.3

Market Share as on 31.03.2007

32%

14%13%

11%

8%

8%6% 8%

ICICI SBI Citi Bank HDFC Stan Chart HSBC ABN AMRO Others


28%

15%16%

9%

9%

6%6%

11%

ICICI SBI Citi Bank HDFC Stan Chart HSBC ABN AMRO Others


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Chart 3: Analysis in terms of MNC, Private and Public Sector Players.

5


36%

43%

19%2%

MNC Private Sector Banks Public Sector Banks Others


37%

38%

22%3%

MNC Private Sector Banks Public Sector Banks Others


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Table 2: Analysis in terms of MNC, Private and Public Sector Players (number of cards in lakh)

Bank31/03/2006

(Actual)31/03/2007

(Actual)31/03/2008(Estimated)

MNC Banks

Citi Bank 28.18 33.23 39.00Stan Chart 17.00 21.25 26.50HSBC 11.35 21.10 26.00ABN AMRO 10.10 16.50 18.00Total 66.63 92.08 109.50Private Sector Banks

ICICI 51.39 80.00 90.00HDFC 16.40 29.10 38.00UTI 0.00 0.80 4.50CBOP 0.60 1.00 1.20Total 68.39 110.90 133.70Public Sector Banks

SBI 26.56 33.57 45.00BOB Cards 4.63 5.10 6.00Canara Bank 2.26 2.36 2.50Andhra Bank 1.66 1.70 2.00Bank of India 1.67 1.42 1.75Vijaya Bank 0.82 1.39 1.55Bank of Maharashtra 0.68 0.70 0.75Syndicate Bank 0.26 0.54 0.55CBI 0.41 0.45 0.50Union Bank of India NA 0.22 0.25Total 38.95 47.45 60.85OthersOthers 6.11 4.16 4.38

Total 6.11 4.16 4.38

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Table 3: Industry Card Spend at the POS Terminals (Amt. Rs. in Crore)

31/03/2006(Actual)

31/03/2007(Actual)

Sr. No. Bank Rank Amount Rank Amount

1 ICICI 01 20,152.40 01 23,000.002 Citi Bank 02 8,284.09 02 9,200.003 SBI 04 6,726.59 03 8,900.004 HDFC 03 7,975.87 04 8,556.005 Stan Chart 05 5,176.78 05 5,634.006 HSBC 06 2,745.43 06 3,250.007 ABN AMRO 07 2,552.08 07 2,987.008 Andhra Bank 08 332.00 08 369.009 Vijaya Bank 09 292.01 09 344.25

10 Bank of India 11 268.50 12 209.0011 Canara Bank 10 282.85 10 287.0012 BOB Cards 12 186.84 11 235.0013 CBOP 14 145.00 13 187.5014 CBI 13 150.21 14 160.00

15 Syndicate Bank 15 102.00 15 132.5716 Union Bank of India 16 51.00 16 83.5617 Others 101.93 134.00

Total 55,525.58 63,668.88Note: Doesnt include spend on American Express Cards.

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Segment Performance

Debit cards are the fastest growing card-based payment segment in India. Debit cards madetheir entry in India late 1998. Due to the nature of the product (buy now, pay now), it hasexperienced exponential growth. There are now over 786 lakh debit cards in circulation.Debit card base in March 2008 is estimated to cross the 1,000 lakh mark.

Chart 5: Growth of Debit Cards Issued

Market Share

The leader in the debit card issuance category for the year is SBI, continuing its aggressive

growth strategy. It is the single largest player in the Public Sector responsible for theincrease in Debit Cards, which started issuing debit cards at the start of 2003 and has nowreached the card base of over 246 lakh. ICICI Bank is the largest issuer of debit cards in thePrivate Sector Banks at around 144 lakh cards followed by UTI with around 65 lakh cards.

Along with the Private and Foreign Banks, many Public Sector Banks have also entered thedebit card segment leading to increase in acceptance and the total base of cards in themarket. In case of debit cards, all banks, especially the Public Sector Banks, have beenreplacing their ATM cards with debit cards with added functionality for point-of-sale usage.

Growt in Debit Cards Issued

31.783.84

181.34

355.01

620.35786.01

1023.32

0200

400600800

10001200

31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.03.07 31.03.08

Year

N o

. o f D e b i t C a r d s

Debit Cards in Lakh

Estimated


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Table 4: Market Share of Individual Players (Number of cards in lakh)

31/03/2006(Actual)

31/03/2007(Actual)

31/03/2008(Estimated)

Sr. No. BankRank No. of

CardsRank No. of

CardsRank No. of

Cards

1 SBI 01 198.08 01 246.12 01 300.002 ICICI 02 98.03 02 144.00 02 180.003 UTI 03 63.35 03 65.19 03 80.004 HDFC 04 49.51 04 51.30 04 54.005 PNB 06 18.00 05 30.65 05 46.006 Andhra Bank 05 18.04 06 23.35 07 28.007 Canara Bank 07 17.43 07 22.68 06 32.008 IDBI 08 16.52 08 19.23 08 24.009 Citi Bank 09 15.30 09 17.90 11 20.80

10 Stan Chart 12 10.78 10 15.67 09 22.7011 Bank of India 10 11.00 11 15.25 10 21.0012 Syndicate Bank 11 10.80 12 14.59 12 20.0013 CBOP 13 9.50 13 12.50 14 15.0014 ABN AMRO 14 6.30 14 10.73 13 18.0015 OBC - NA 15 6.50 16 9.0016 Bank of Baroda 16 4.08 16 5.75 15 10.0017 HSBC 15 4.10 17 5.25 17 6.5018 Bank of Maharashtra - NA 18 2.64 19 3.6019 J & K Bank - NA 19 2.61 20 3.5020 Vijaya Bank - NA 20 2.27 18 4.0021 Others 69.53 71.83 125.22

Total 620.35 786.01 1023.32

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Chart 6: Comparative Market Share of Individual Players

As can be seen from the charts, the leader in the market is SBI commanding 31% marketshare, followed closely by ICICI Bank with 18%, thereafter followed by UTI Bank holding amarket share of 8%.

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32%

16%10%8%

3%

3%

3%

25%

SBI ICICI UTI HDFC PNB Andhra Bank Canara Bank Others


31%

18 %8%7%

4%

3%

3%

26%

SBI ICICI UT I HDF C PNB And hra Ba nk Ca na ra Ba nk O th er s


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Segment Performance

Owing to the entry of aggressive Private Sector Banks, ATMs have mushroomed all over theurban Indian landscape. Subsequently, even PSU banks have followed suit with increasingnumber of ATMs. ATMs have grown in the last five years from 1,100 ATMs concentratedmainly in the metros to about 27,000 across the country by March 2007. They are estimatedto cross the mark 33,000 by March 2008.

Chart 7: Growth in the number of ATM Outlets

Market Share

SBI has the largest network of ATM outlets with 6,441 outlets followed by ICICI Bank with3,335 outlets and UTI Bank with 2,341 outlets. To increase ATM usage among the Indianpopulation, banks are getting into mutual agreements for sharing ATM network amongstthem.

12

Growth in No. of ATM Outlets

54807851

1133416750

2150927088

33520

0

10000

20000

30000

40000

31.03.02 31.03.03 31.03.04 31.03.05 31.03.06 31.03.07 31.03.08

Year

N o

. o f A T M O u t l e t s

Estimated


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Chart 8: Market Share of Individual Players

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Market Share for ATM Outlets as on 31.03.2007

24%

12%

9%6%4%3%

42%

SBI ICICI UTI HDFC Canara Bank UBI Others

Market Share for ATM Outlets as on 31.03.2006

26%

10%

9%6%4%2%

43%

SBI ICICI UTI HDFC Canara Bank UBI Others


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Table 5: Market Share of Individual Players

31/03/2006(Actual)

31/03/2007(Actual)


Sr. No. Bank

Rank No. ofATMs

Rank No. ofATMs

Rank No. ofATMs

1 SBI01

5,50001

6,44101

8,5002 ICICI 02 2,200 02 3,335 02 3,9003 UTI 03 1,891 03 2,341 03 2,8004 HDFC 04 1,323 04 1,605 04 2,0005 Canara Bank 05 815 05 1,132 05 1,5006 PNB 06 670 06 1,009 05 1,5007 Bank of Baroda 16 210 07 1,000 06 1,1008 Corporation Bank - NA 08 929 07 1,0009 UBI 08 472 09 769 06 1,100

10 Syndicate Bank 13 326 10 701 08 90011 OBC 07 524 11 666 10 70012 Andhra Bank 10 391 12 522 11 650

13 IDBI 12 377 13 520 09 75014 Citi Bank 09 415 14 452 13 55015 Indian Bank - NA 15 426 12 60016 CBOP 11 388 16 406 16 41017 Federal Bank - NA 17 391 17 40018 IOB - NA 18 359 14 45019 Bank of India 14 315 19 337 15 44020 Bank of Maharashtra 19 145 20 302 19 34021 Dena Bank 15 250 21 269 20 30022 CBI - NA 22 261 18 35023 Allahabad Bank - NA 23 208 23 215

24 Stan Chart16

18024 191 21

27025 J & K 17 178 25 175 22 22026 HSBC 18 160 26 171 25 190

27 Vijaya Bank - NA 27 171 24 20028 UCO Bank - NA 28 158 26 18029 ING Vysya - NA 29 158 22 22030 United Bank of India - NA 30 144 27 17531 DCB 20 101 31 102 28 11032 Others 4,678 1,437 1,500

Total 21,509 27,088 33,520

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As on March 2007 there are more than 3.5 lakhs terminalised merchants that acceptpayment cards as compared to 0.70 lakh terminalised merchants in 1999-00. ICICI Bankhas acquired the largest number of merchant establishments, followed by HDFC Bank.

Although a vast majority of merchants around the country remain cash-based, there is aclear trend that more and more merchants are accepting cards for payment not only in mainmetros but also in Tier I and II towns and cities.

Table 6: Market Share of Individual Players

31/03/2006(Actual)

31/03/2007(Actual)


Sr. No. BankRank No. of MEs Rank No. of

MEsRank No. of

MEs1 ICICI 01 77,800 01 155,000 01 200,0002 HDFC 02 56,800 02 58,000 03 61,0003 Citi Bank 03 35,000 03 42,000 04 48,0004 UTI 04 20,964 04 40,000 02 75,000

5 HSBC 06 11,000 05 17,000 05 25,0006 BOB Cards 05 13,000 06 14,834 06 15,0007 CBOP 07 8,000 07 8,500 07 9,0008 IDBI 08 5,255 08 5,325 08 6,3009 Andhra Bank 09 3,900 09 3,962 09 4,000

10 Canara Bank 10 2,450 10 1,721 10 1,80011 Vijaya Bank 11 1,500 11 1,618 11 1,80012 Stan Chart 12 1,377 12 1,400 12 1,50013 Bank of India 13 1,200 13 1,330 13 1,50014 J & K Bank 15 326 14 823 14 1,50015 CBI 14 700 15 739 15 1,000

Total 239,272 352,252 452,400

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Chart 9: Bank wise Growth of merchant Establishments

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Bank Wise Growth of Merchant Establishments

050,000

100,000150,000200,000250,000

I C I C I

H D F C

C i t iB

a n k

U T I H S

B C

B O BC

a r d s C B

O P I D B I

A n d h

r aB a n k

C a n a

r aB a n k

V i j a y

aB a n k

S t a nC

h a r t

B a n k

o fI n d i a

J&KB

a n k

C B I

Banks

N o

. o f M E s

2006 2007 2008 Estimated


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Go rural

There is clearly a need to extend adequate and timely support to farmers for theirshort-term credit needs and to improve their accessibility to bank credit forproduction purposes. Credit cards like the Kisan Credit Card are simplifying thecredit delivery mechanism wherein its a revolving cash credit limit with any numberof withdrawals and repayments that will support the farmers needs.

Extensive offerings through loyalty cardsToday substantial portion of cardholders carry more than two cards, hence anattractive reward scheme on one card distinguishes it from others. Every cardprogram has started offering some form of reward scheme linked to the card spends.A typical program awards loyalty points to the cardholders every time he uses thecard, based on the amount spent. These points when accumulated can beexchanged for free gifts or cash back schemes.

Focus on compulsive spend segment (co-branded cards)

The compulsive spend segment like petrol, utility bills, grocery items typically did not

witness much of card payments till recently. This segment has become a primetarget area to enhance usage of payment cards by way of co branded cards wherebanks began tying up with departmental stores, petrol outlets etc. The consumer isnow being rewarded for using his payment card when booking railway tickets byensuring that he does not pay any surcharge on his travel. Such and many moreexamples across segments has resulted in a growing focus on the compulsive spendsegment.

Value added stand alone incentives for usage of cards

The banks have begun offering their standalone incentives for increased usage oftheir payment cards. Various banks have started offering schemes like the cash back

scheme, which is an added attractive incentive for the customer to use his paymentcard.

Almost at a cost of nothing

With competition intensifying in the payments cards industry almost every bank nowoffers a payment card sans its regular standard charges. Its now almost norm derigueur to be presented with a lifetime free card without any annual or joiningcharges associated with the same.

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Rural Kiosks

One has also been witnessing a trend among Indian banks tapping into alternativemethods to penetrate the burgeoning rural market. One such initiative is the ruralkiosk, which is being set up by leading banks in the interiors of the country. Theserural kiosks are a step towards bridging the digital divide that exists between thecyber cities of India and the remote interiors, which have been untapped for years.

***

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Abbreviations

ABN ABN-AMRO Bank

Andhra Andhra Bank

BOB Bank of Baroda

BOI Bank of India

CBI Central Bank of India

CBOP Centurion Bank of Punjab

HSBC Hong Kong & Shanghai Bank Corp.

IOB Indian Overseas Bank

J&K Jammu & Kashmir Bank

MEs Merchant Establishments

OBC Oriental Bank of Commerce

PNB Punjab National Bank

PSBs Public Sector Banks

SBI State Bank of India

StanChart Standard Chartered Bank

UBI Union Bank of India

UTI UTI Bank

NA Data Not Available

NOTE:1. Exchange rate has been uniformly taken at 40 INR = 1 USD2. We have used the expressions Lakh and Crore. For converting these units into millions you

can use the following guide:a) 10 lakh = 1 million.b) 10 million = 1 crore.

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Research

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Documents

Payment Card Industry Survey 2007