A Study on Customer Satisfation Level in Using Debit Cards in Banks

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Like the ATM side of the industry, the debit-card side has also seen important changes, especially in transaction volume and industry structure. After a long gestation period in which debit transactions grew slowly, debit transaction volume began to grow very rapidly in the mid- 2000s in India. Paralleling developments in the ATM industry, the number of online debit networks has declined and industry concentration has increased. Perhaps the most dramatic development in the industry has been the race between online and offline debit. Important underlying elements in this competition are the fee structures associated with debit card payments and rules that compel merchants to accept offline debit cards. This section reviews these changes. The section also reviews authorization, fee, and settlement arrangements for debit transactions. In addition, emerging products that use debit cards for making payments are surveyed.

Although debit cards were in use during the 1980s, transaction volume was negligible. In the early 1990s, growth was sufficient to make debit card volume more noticeable, but by 1995 it still represented only 2 percent of retail noncash payments.68 Strong growth in more recent years, however, pushed the percentage to 11.6 percent in 2000.69 As seen in Chart 10, online and offline debit transactions showed similar growth patterns from 1990 to 1995, and by 1995 each had roughly the same number of transactions. However, after 1995, the growth of offline transactions outpaced online, so that by 2000 the number of offline transactions was 63 percent higher than online transactions.70 As a consequence, online debit’s share of total debit transactions has fallen .Online debit represented about 60 percent of debit transactions in the early 1990s, but in the last few years its share has been closer to 40 percent. Online debit’s share has increased the last couple of years as volume growth has accelerated, but it is too soon to tell whether this trend will persist.

The number of cards in circulation that have a debit function (either online or offline) has also grown, rising from 130 million in 1985 to 287 million in 2002 . However, until well into the 1990s, few consumers were using the debit function of their cards: there were less than 10 annual debit transactions per card in circulation until 1990. Since then, annual debit transactions per card have risen to nearly 50. It is clear that the late 1990s witnessed a sea change in how consumers use their debit cards.


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