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.

1. Virtual cards thriving in emerging markets; expected
to grow at over 30% over the next five years in India
Analyst View Point Series

2. Table of Contents
Market Context
Key Insights

3. Market Context
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.

4. Key Insights
According to published sources, 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.

5. Key Insights
• 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.

6. Key Insights
• 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.

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