Cards will do moreYou can use your credit card as of now only at specified merchant establishments, hotels or to access cash through automated teller machines (ATMs).
Card-use, as of now, is largely targeted at making purchases which do not fall in the genre of everyday or the essential.
Change is, however, in the offing. Soon, credit card holders may even be able to settle their electricity bills, telephone and insurance charges through credit cards. Or even pay for groceries.
The modalities will eventually be worked out. And no more paying by cash or issuing cheques. It will also be more convenient than making payments for utilities via ATMs.
Citibank, StanChart and SBI Cards are already exploring the option of enabling cardholders to settle their utility charges by credit card.
In fact, Citibank is in advanced talks with both Visa International and MasterCard International to offer this facility.
The move, when it fructifies, will in one stroke widen the scope of credit cards. Issuing banks and financial institutions will see card spends increasing. And as that happens they will also be able to offer better reward programmes on credit cards.
The card base will widen as more merchant establishments like grocers, pharmaceutical outlets, and other sundry service providers like laundries will be able to come on-line, especially in the non-metros. This is also critical to the growth of the payment card business.
Newer players with bigger reach like SBI Cards or ICICI Ltd can do a lot in this direction if payment for essentials is allowed to be settled through credit cards.
Industry sources point out that more than credit cards, it could well be that debit cards will facilitate this. Rather than pay for your electricity usage via credit cards and incur additional interest charges in case you do not settle within the interest-free period, a debit card will deduct your bank account directly. Internationally, too, this is the trend in low value transactions.