Virtual cards thriving in emerging markets; expected to grow at over 30% over the next five years in India

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Financial inclusion is one of the key agendas of emerging markets due to large population being unbanked. Unbanked population has led to cash based transactions being predominant in these markets. However, with advent of technology propelled by consumer behaviour, alternative payment methods are making a steady progress across these countries. Yet, lack of infrastructure and awareness poses to be major challenge towards mass adoption of these payment systems. India is one of them. The country has 28 million credit cards and 708 million debit cards, but POS terminals account for only 1.48 million in comparison to Brazil with 4.9 million. It has 2.2 million ATM machines whereas China has 7.3 million.

About 79% online transactions in India are conducted by people below 30 years of age. This shows growing adoption of various online payment modes such as mobile wallets, virtual cards and contactless transactions among younger generation. Certain partnerships and new products are being launched in virtual card payment segment.

• Payment solution provider ItzCash has partnered with card network Visa, which permits Itzcash to issue Visa payment instruments such as virtual Visa card and Visa payWave cards. It will also be able to process merchant transactions with mVisa and facilitate P2P payments and fund transfers through Visa Direct. Itzcash is perhaps the first non-banking financial institution to gain this partnership. Earlier this year, it got permits to run Bharat Bill Payments Operating Unit (BBPOU) characterized by Bharat Bill Payment System (BBPS) which is a centralized interoperable bill payment system. In FY2015-16, Itzcash processed transaction volume of USD 1 billion approximately in utility bill payment segment. With this partnership, it is likely to facilitate business expansion in other payment segments and add to the revenue generation significantly.
• Yes Bank issued 1.7 million virtual cards in association with Freecharge on MasterCard platform earlier this year. The new virtual card called ‘FreeCharge Go’ performs MPIN based transactions for added security. The platform has a track record of 72% repeat customers and this initiative is expected to add to the customer base and gaining profit margins in coming years.

To know more and gain deeper understanding of mobile payment industry in India, click here.