Cardholders number rise, but cash still dominant retail payment instrument

KATHMANDU, APR 13 -

Despite a significant growth in the number of debit/credit cardholders, Nepali customers still prefer to pay by cash . Both bankers and merchants say the number of people making merchant payment through cards is negligible.

Even best of shopping malls, department stores, restaurants and fashion outlets in the busiest shopping streets of Kathmandu see very less

number of people who pay through cards.

“If you see the past trend, there has been a significant growth in the number of

cardholders. However, most of them use their cards to withdraw cash from ATMs only,” said Anish Tamrakar, head of card division at Sunrise Bank. “Only two-three percent of our cardholders make merchant payment by cards.”

Sunrise Bank has issued around 70,000 debit cards so far.

Similar is the case with another prominent financial institution Kumari Bank. According to Pankaj Rana, head of the bank’s card division, Kumari records around 2,000-2,300 card transactions every day. “Of the total transactions, only around 50 transactions are done for merchant payment,” said Rana.

The main reason behind the dismal growth in the number of customers making payment by cards is the lack of awareness, according to Rana. “Many cardholders are still not aware about the fact that they can make merchant payment by their debit cards,” he said.

Traders’ reluctance to accept payments through cards too has played a crucial role in the dismal growth in card-based transactions, Tamrakar added. Although the card-based payment system is more convenient, hassle-free and time

saving for retailers, they are reluctant to adopt this mode of payment. “It seems it is necessary to make retailers aware about the benefits card transactions,” Tamrakar said.

According to Antim Ranjit, branding and marketing manager at Big Mart department store, only 12-15 percent of the shoppers pay by cards. Big Mart operates stores at City Centre, Lazimpat and Jhamsikhel. “Mostly, people having

sound economic status and young people prefer cards for payment,” Ranjit said, adding college-going students are joining the trend.

Ranjit too attributed the lack of awareness for people’s reluctance to make transactions through cards. Even those customers, whom we refer to make payment through cards, go for cash . “They feel retailers might charge high while dealing through cards,” Ranjit said, adding many customers are surprised seeing others making payments through debit cards.

A source at one of the prominent department stores told the Post that the main reason behind retailers’ hesitation to accept card payments is the service fee charged by banks.

“Retailers are charged 3.5 percent of the transaction amount as servicer fees. Customers are not aware about this fact,” he said, adding because of this fact, retailers cannot offer discounts as preferred by Nepali customers. He said retailers would promote the card business if banks stop charging them or reduce the service fee.

Yunesh Puri, head of card division at NIC bank, said the trend of making payment through cards is only visible in prominent stores of Kathmandu and Pokhara, which has prevented financial institutions from promoting card transaction aggressively. “As our market is very small, recovering the amount spent in promotion will be a tough job,” he said.

Source: The Kathmandu Post