Image Courtesy:indianexpress.com
The ongoing lockdown has hit the courier services in the country. Due to this, banking customers, whose debit and credit cards have crossed their expiry date or are set to expire in the next couple of months, are now facing a challenge of how they will get their cards replaced, because the local authorities have not allowed courier companies to function despite the Centre mandating a restart post April 20, reported The Indian Express.
A senior official of a leading payment network company, while on an average around 50 lakh cards come for renewal every month, the number of renewal application for the month of April are expected to be higher than average. The official said, “On an average, about 4-5 million cards across banks come up for renewal every month keeping 5 year validity in mind. If you extrapolate that for three months the number would be close to 1.5 crore cards and thus it will impact a large number of customers.”
The IE states that in April 2015, the banking industry had added 1.13 crore debit cards and over 1.7 lakh credit cards. Even if 80 percent of these accounts which have a validity of five years and are currently active, 90 lakh cards were due to be renewed in April 2020. In the month of May 2015, over 60 lakh new cards were added and they would ideally come for renewal next month.
Reserve Bank of India (RBI) data states that as on March 31, 2019, the number of debit and credit cards issued were 925 million and 47 million respectively. In the year 2017, debit and credit cards made up 29.9 percent of India’s payment systems volume and volume of card payments grew by a CAGR of 40 percent from 880 million transactions in 2012 to 4799 million transactions in 2017.
RBI data also shows that there as of January 2020, there were 81.6 crore outstanding debit cards and 5.6 crore outstanding credit cards.
Banking has been declared as an essential service during the lockdown and bankers are now asking for the physical delivery of the cards to be declared an essential service too. However, a senior official from a private sector bank explains, “While some businesses like courier have been allowed post April 20, the situation on the ground is not exactly conducive for courier companies to deliver the cards to customers.” The official also added that banks had reached out to India Post for help to deliver these cards, but it refused to do so.
“Unavailability of courier services has affected not only delivery of cards but also many other banking operations. We are trying to ensure that customer inconvenience is minimised. The impact right now is limited since customers need cash only for essentials as other economic activities are shutdown,” the senior official added.
Do the customers have an option?
Banking officials say there are a few options to debit and credit cards, but they are quite inconveniencing.
One is cardless withdrawal and virtual cards. Sources say only handful of banks offer cashless withdrawal facility. Another option is the virtual card, but bankers say while virtual cards are used for e-transactions, there is a constraint on cash withdrawal which is the prime necessity in current times.
For example, ICICI Bank’s Cardless Cash Facility allows customers to withdraw cash from over 15,000 ATMs of the bank by raising a request on its mobile banking app, iMobile. This allows customers to withdraw cash without using a debit card at ATMs.
The virtual credit card, as explained by Bank Bazaar, is a one-time use credit card that has no physical existence and can be used for carrying out online transactions only. Like physical credit cards, a virtual credit card has its own unique card number, validity date, the expiry date, and the CVV number which are visible online. You can also set your own spending limit on the virtual credit card. However, these cards may usually have a very short validity.
Banks too can enhance the expiry period of the card issued by them, but it is a tedious process. “We will have to do segregation according to customers and then process it both at our end and also get the merchant systems updated,” said an official with a bank.
Another option is for the customers to withdraw cash from the bank to meet their needs.
“By far, debit cards are the most convenient for a large number of people and if the renewed cards don’t reach the customer, it will cause inconvenience to millions,” said a banker.
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