India is one of the fastest-growing countries in the plastic money segment, with close to 350 million debit cards and 19 million credit cards in circulation.
"Credit cards have a higher share in the discretionary category whereas debit cards dominate in routine expenses like utility payments. About 30 percent of credit card spends are being done online. At least 10-15 percent of customers use their cards only online, many from smaller cities," the central bank said in a report.
According to MasterCard, 75 percent of all card payments are concentrated in top 20 cities with Delhi, Mumbai and their suburbs alone accounting for 43 percent.
A Visa study reveals that people in the monthly income band of Rs. 75,000 to 100,000 are the most prolific users of electronic cards.
The RBI said electronic payments dominate their expenses: rail/ airfare (71 percent), durable goods (61 percent), rent (49 percent), telemobile (47 percent), medical institutions (46 percent), clothing/ footwear (44 percent), beverages and refreshments (35 percent).
"Card payments form an integral part of e-payments in India because customers make many payments on their card - paying their bills, transferring funds and shopping," said the RBI report on 'Enabling Public Key Infrastructure (PKI) in Payment System Applications'.
Debit cards entered India in 1998 and they currently account for almost 95 percent of the total number of cards in circulation.
Credit cards have shown relatively slower growth even though they entered the market one decade before debit cards.A majority of credit card purchases come from expenses on jewellery, dining and shopping, the RBI added.