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The cash card blitz

When cash cards first entered the Indian market, there was speculation about how well they would fare. Five years down, and cash cards have climbed to become the second-most preferred transacting option for railway bookings. By Andrea Lopez

According to reasonable estimates, almost 70 per cent of online transactions are towards airline and train bookings. Of this, the share of cash cards has been growing slowly but steadily. This is because unlike credit cards they enable people without bank accounts or those who don't wish to divulge their banking information online to book their tickets, thus making online transactions cashless and simpler.

According to MarketResearch.com, the inbound tourist expenditure in India per head is the third highest in the world - even higher than global average tourist spending. Naveen Surya, MD of one of the cash card companies in the market, Itz Cash, attributes the change in attitude and the surge in the popularity of cash cards to the wider technology access. "There is a growing segment that is able and willing to transact over the internet and travel companies have realised the potential of moving to electronic ticketing."

In fact, cash cards have climbed to occupy the position of the second-most popular payment option for railway bookings in a span of five years. Surya adds, "When Itz Cash entered the market in 2003, it was the eleventh payment preference for railway bookings. Today, it commands a market share of nearly 15 per cent on IRCTC's booking engine." Another cash card company - Done Cards - entered the Indian market in 2005. While travel is the largest segment using cash cards currently, it is followed by utilities, Surya believes.

Why the popularity?

An interesting part of such cash cards is the minimal identification required to obtain them. Once a buyer pays through such cards, the money is immediately debited from their account in real time. Since it was a new concept, it initially took some time to be easily available and be synonymous with cash. The system that cash card companies have adopted is to rope in merchants and have tie-ups with railways, airports, BEST and other private bus companies, travel agents and even local grocery stores to become their distributors.

Assessing their popularity and convenience, IRCTC has added the payment gateway onto its site. The reasons behind the success of cash cards can be attributed to two primary reasons - low penetration of credit cards and discomfort using them for online transactions. In a country of over a billion people, a mere 25 million hold credit cards.

Itz Cash works through appointed agents to distribute its products. Currently, its cash card can be used to transact on nearly 3,000 websites. The increased usage for railway bookings has been a new trend. Sanjay Aggarwal, GM (Operations) at IRCTC, confirms this. "Itz Cash has a share of Rs 31 crore, followed by Done Cards with Rs 27 crore and others with Rs one crore. Currently cash cards contribute to 27 per cent of IRCTC's share of bookings and is picking up very fast," says Aggarwal.