India has the potential emerge among the top five economies in the world for electronic payments and transactions, according to study by a global player in the industry.
"India will climb...to be one of the world's top five generators of non-cash payments by 2017," said a study conducted by analysts with TSYS.
The study notes that in the emerging BRIC (Brazil, Russia, India and China) markets, cash remains king; but in India the tide is turning as consumers increasingly conduct electronic payment transactions with either plastic cards or, to a lesser degree, mobile phone-based applications.
Electronic card transactions - debit, credit and prepaid - are growing at double-digit rates with debit cards' compounded annual 45.5% driving the growth.
This market trend is being driven by a population of more than 1.2 billion, 350-400 million of which are part of the burgeoning middle class. This key demographic, growing annually at 5%, is developing a strong appetite for consumer goods that can be supported through access to basic banking services provided by domestic and foreign financial institutions.
But to reach the projected level of electronic transactions, the analysts have called for correcting the market imbalance by increasing the per capita penetration of ATMs and point of sales would help serve consumers' increased appetite for electronic banking transactions. This could be a key driver in accelerating card adoption.
Financial institutions or banks issuing cards should prioritise market competition based on product differentiation and customer-focused initiatives related to product development, customer acquisition, account activation, usage, pricing, risk management and loyalty / reward programmes; or on product innovation focused on the development of new products or programmes targeting the distinct market segments.
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