HDFC Bank also discontinued cash-back services earned on platinum debit cards on categories such as fuel, jewellery, etc
Nupur Anand | Mumbai May 30, 2014 Last Updated at 00:47 IST | Business Standard
Now, HDFC Bank’s debit card users cannot avail of benefits such as free insurance covers if they don’t use their cards for shopping or online transactions at least once a month, even if they continue to use it for cash withdrawals from automated teller machines.
In a separate move, the bank discontinued cash-back services earned by platinum debit card users on categories such as fuel, jewellery, insurance, mutual funds and government payments.
In a message to its customers, the bank said, “Effective July 1, 2014, your debit card needs to be used once every month, at stores or online, to keep your personal accident death insurance cover active.”
The bank’s platinum debit card has a free accidental death cover of Rs 10 lakh.
On the reasons for the move, HDFC Bank said, “Debit card is a convenience product and we want to influence the usage habit of customers to make them use their cards for daily purchases, instead of using cash. Regulators had reduced merchant fees on debit cards to drive electronification of payment and move away from a cash economy. This feature will help complement that.”
Experts feel the bank’s move is an effort to improve sales of its debit card and credit card swipe machines, called point-of-sale (POS) terminals, along with debit card usage. “If debit card swipes increase, POS sales, which are a huge revenue channel for the bank, will also go up,” said an expert.
The move was also aimed at encouraging small-ticket purchases, said an industry official.
Sources said competition in the POS terminal space had increased, with State Bank of India turning aggressive in this space. According to a Worldline India report, as of March-end, the share of public sector banks in this space had risen to 21 per cent from six per cent a year earlier. Through the last two years, the overall POS terminal base has grown 74 per cent.
The report added till March this year, sales of POS terminals had crossed the one-million mark.
Source : http://goo.gl/QuGQpY