HDFC Bank Ltd plans to strengthen its grip on the fast-growing card payment market by opening another 200,000 point of sale (PoS) terminals in 18 months.
“We are currently the largest credit card issuer, have the largest market share in terms of spends through cards and as India moves towards a cash- less economy we would like to own the largest network of terminals,“ managing director Aditya Puri said.
HDFC is second to Axis Bank Ltd in terms of number of terminals. But at 30%, it has the largest market share of expenditure through cards.
Axis Bank has 187,266 PoS terminals, its spokesperson said.
Spending through debit and credit cards is rising, shows data released on Monday by the Reserve Bank of India (RBI).
Credit card payments rose 22% to `75,516 crore in fiscal 2010-11. Spending through debit card grew at 65% to `38,691 crore.
More PoS terminals are likely to help HDFC add customers, increase earnings from fees and cut costs linked to handling cash, said Loney Antony, managing director at Prizm Payments Services Pvt. Ltd, which deploys, manages and operate PoS networks for banks.
“A wider network gives banks the opportunity to get in touch with merchants, whom they can tap to open current accounts and later offer more products like overdrafts, credit facilities and securitization of receivables”, Antony said.
Fees from PoS terminals for banks vary, depending on the location of the terminal and number of payments made through it. The fees are shared between the bank that has is- sued the card under transaction and the bank that has in- stalled the machine.
“Merchants pay 1.1% to 1.8% of the purchase as fee to banks, majority of which goes to the bank issuing the card. With a wider network, HDFC will be able to corner the whole amount of fees”, Antony
Pralay Mondal, country head, retail assets and credit cards at HDFC Bank, said the card business has grown over 30% in the last few years and he expects that pace to contin- ue.
“Credit card payments ac- count for just 2.5% of the pay- ment while debit cards ac- count for 1.5%, so there is so much scope”, Mondal said.
The credit card business accounted for `5,500 crore of the `80,000 crore retail balance sheet of HDFC in the year ended March.
There were 17.6 million credit cards in circulation as of May, along with 24.3 million debit cards, according to RBI. HDFC Bank is the largest credit card issuer with 5.3 mil- lion cards outstanding and adds 80,000 new credit cards per month.
(Source-: mintlive)
