Sixty-year-old Arun Awasthi is averse to using debit cards for online transactions and is even more averse to credit cards. However, he is also wary of using cash for every transaction.

"Exactly the kind of customers targeted by our firm," asserts Itz Cash Card Managing Director Naveen Surya.

While cash cards are not a new concept and the user need not have a bank account, they are yet to gather steam in India.

Most cash-card companies are taking the next big step with mobile wallets.

Click NEXT to read more...

Here, the prepaid card is replaced by a PIN number. You can text your consumer number and PIN (instead of the card number) to pay bills.

This is a semi-closed wallet service that allows mobile users to pay for various services/products for up to Rs 5,000. You can load money into your mobile phone from a licensed wallet provider, make payments, but cannot withdraw money.

According to RBI estimates, India has over 700 million mobile phone connections, but only 50,000 of the 600,000 villages have bank branches. Many mobile service providers, like Bharti Airtel, also offer this service.

The market remains conducive for growth. Industry experts say about 10 per cent Indians use debit and credit cards, while the prepaid cash card market at Rs 22,500 crore (bank and non-bank cards together) is targeting the remaining 90 per cent, primarily the unbanked population.

Click NEXT to read more...

Globally, the market is expected to touch Rs 40,50,000 crore by the end of the year. Given the unbanked population in India and the number of transactions ($529 billion daily), there is huge scope for cash cards.

Players are lining up plans to lure users. To increase its volumes, Itz Cash, for instance, has tied up with Reliance Energy.

Customers can pay their bills through the card online or via text message (by sending consumer and card number to Reliance Energy's customer care number) or at Itz Cash outlets.

Surya of Itz has even gone a step further and tied up with the Municipal Corporation of Greater Mumbai (MCGM) for octroi collection.

Truck drivers are given touch-and-go prepaid cards at separate collection terminals on the toll bridge. "MCGM has seen a three-fold increase in revenue with these cards," says Surya.

Click NEXT to read more...

Despite the convenience, cash cards continue to be a challenge for service providers, with sales not picking up.

"Volumes from transactions through these cards is very low because consumers don't understand it. Our staff in retail outlets or franchisees use these cards for paying on customers' behalf," says Meher Sarid, ED (brand, marketing & value-added services), Oxigen Services.

The company is converting retailers to use cash cards for mobile phone top-ups, while the customers pay cash at the retail end. But experts argue that growth cannot piggy-back on the card business alone.

Apart from tie-ups with the likes of Croma and PlanetM, companies have launched exclusive cards for paying Vodafone and Dish TV bills.

"We are also present in a few school canteens and PCO booths," says Sarid.

Click NEXT to read more...

These cards work as a good gift, she adds. Many give these cards to their school- or college-going children to keep control on their expenses.

And, like Sarid says, cash is here to stay because Indian consumers are not satisfied till they can touch and see what they are using.

In collaboration with banks, non-banking card companies may bring out some more cards like close-ended cards (something like recharge or calling cards for phones) and open loop cards, which will work like debit cards (bank ATM services would be available), even without having a bank account.

Click NEXT to read more...

Cruise With Cash Cards:

What is a cash card?

Cash or prepaid cards are topped with money before use; they work like a debit card.

How to buy it?

You can buy these cards over-the-counter by complying with the requisite know-your-customer (KYC) norms.

Who issues these cards?

Most public and private banks and non-bank companies like Itz Cash or Oxigen services. A bank-issued card can be used at retail outlets and for withdrawals at ATMs.

How do bank-issued cards work?

Can be loaded for Rs 500 or Rs 1,000 to Rs 50,000

Banks charge for cash cards - higher of Rs 100 or a per cent of the loaded amount

Travel cards (issued by banks or money-changers) loaded in destination currencies; one-time currency conversion rate applicable

Travel cards available in all major currencies for a fee of Rs 100-200

Click NEXT to read more...

How do non-bank cards work?

Charges are applicable on some transactions, like an extra Rs 10 for booking railway tickets online through Indian Railway Catering and Tourism Corporation

Can be filled for Rs 100 to Rs 10,000

One-time use available for Rs 50 or Rs 100; to be used for full value or for a single transaction

Multi-use cards should be reloaded in six to 12 months