India's electronic financial sector has rooms for competition

There is enough room to create more competition in the electronic and digital segments of the financial markets in India, especially the cash-management through ATM-debit card use, a top MasterCard executive said.

The potential of ATM-debit card transactions is huge in the cash-driven Indian economy comprising of some 58 million small and medium enterprises (SMEs), merchants and traders, said Ari Sarker, co-president for Asia Pacific at MasterCard.

"Our interest in India is driven by the fact that it is 95 per cent cash economy," Sarker told PTI of the current cash-based dealings among most of the SMEs, merchants and traders, who are members of the Confederation of All India Traders (CAIT).

A competitive environment would produce innovative products and services, especially in line with the government's initiatives which aggressively promote mobile banking among others.

Currently, the Rupay Card of the National Payments Corp of India (NPCI) dominates the debit card market.

While appreciating the Rupay lead, Sarker felt the Indian market is ready for more players.
"The greatest service the country can do is to encourage many players to play in this industry, because the more people you allow to play, the better are the products, services and level of competition," he said.

Sarker estimated that the over 520 million debit card users were withdrawing an average of USD 370 billion in cash a year from a 190,000 ATM network.

The ATM volume makes up 87 per cent of the entire market flow with the rest 13 per cent done through e-commerce and point of sale.

Going forward, SMEs, traders and merchants would have to increase the use of electronic banking transactions which would eventually support credit worthiness of their business among financial institutions.

Looking forward to an open competition, Sarker reaffirmed MasterCard's presence in India with expansion plans.

In May this year, MasterCard and CAIT launched a joint initiative to promote the digitisation of payments among Indian traders, through knowledge sharing and training sessions across the country, in line with the government's "Digital India" vision.

Sarker said the training will cover CAIT's 58 million members who are merchants, traders and SMEs.