Thread by @deepakvenkatesh

1/n
Little probing on SBI Cards IPO

Since SBI IPO is on its way a lot of data is being cut in different ways from RBIs reporting to make it look nice eg
H bank has max cards in force
X bank customers do Y txns per month
A bank's customer's have B avg ticket size per swipe

2/n

There is a concept of 'activation rate' of a cards portfolio. If there are X cards in force it doesn't mean X cards get swiped. Activation rates are not made public. But on digging deep into some card network reports you will get an idea.

3/n

Debit card and credit card portfolios have very very different activation rates..sorry activation rate is what fraction of cards in a portfolio does the card get swiped/dipped.

4/n

There is a concept of interchange for merchant txns and a concept of reverse interchange for cash withdrawals. Do read about this.

5/n

Terms like Merchant discount rate, merchant service fee, issuer interchange, acquirer fee, processor fee structure, instrument discount rate etc. have been not discussed in all papers and notes I have read. The ecosystem is important. Not just one aspect of this.

6/n

RBI regulations around issuance and acceptance across different instruments should be looked at.
Not just India but what is the trend around the world.

7/n

Having said that I have not looked specifically at SBI financial statements and projections. But leaving that aside this will be a good play on the financialisation theme.