Card-to-Card Fund Transfer

Card-to-card fund transfer refers to a digital payment mechanism that enables the transfer of money directly from one debit or credit card to another without the need for traditional bank account details. In the context of banking, finance, and the Indian economy, card-to-card transfers represent an extension of card-based payment infrastructure aimed at enhancing convenience, speed, and accessibility in electronic fund movement. Although not as dominant as account-based systems, card-to-card transfers contribute to the diversification and inclusiveness of India’s digital payment landscape.

Concept and Meaning of Card-to-Card Fund Transfer

A card-to-card fund transfer allows funds to be moved from the sender’s card to the recipient’s card using card credentials such as the card number, expiry date, and authentication factors. Unlike account-to-account transfers, which rely on bank account numbers and branch identifiers, card-to-card transfers operate within card payment networks.
These transfers are typically processed as real-time or near real-time transactions and may be used for person-to-person transfers, emergency payments, or limited-value remittances. The mechanism leverages existing card infrastructure, making it particularly useful where bank account details are unavailable or inconvenient to share.

Evolution of Card-to-Card Transfers in India

In India, the growth of card-to-card fund transfer mechanisms has been gradual and closely linked to the expansion of card usage and digital payment acceptance. Initially, cards were primarily used for cash withdrawals and merchant payments. Over time, technological advancements and fintech innovation enabled cards to function as instruments for direct fund transfers.
Regulatory support and payment system modernisation encouraged experimentation with alternative transfer channels. The Reserve Bank of India has played a key role in overseeing payment system development, ensuring that card-based transfers adhere to security, settlement, and consumer protection norms. Although account-based systems remain dominant, card-to-card transfers have found niche applications within the broader ecosystem.

Operational Mechanism

Card-to-card fund transfers operate through card networks and payment processors. When a transfer is initiated, the sender’s card is debited, and the recipient’s card is credited through the card network’s settlement system. Authentication mechanisms such as one-time passwords or secure PIN verification ensure transaction legitimacy.
Issuing banks authorise transactions, while acquiring or processing entities route and settle the funds. The process relies heavily on secure messaging, encryption, and real-time transaction monitoring to prevent fraud and unauthorised access.

Role of Banks and Financial Institutions

Banks are central participants in card-to-card fund transfers. As card issuers, they authenticate customers, approve transactions, and manage settlement and dispute resolution. For banks, such transfers expand the functional utility of cards beyond payments and withdrawals.
Card-to-card transfers also allow banks to offer value-added digital services without requiring extensive changes to core banking systems. However, banks must manage associated risks, including fraud, chargebacks, and compliance with regulatory requirements.

Payment Infrastructure and Institutional Support

The effectiveness of card-to-card fund transfers depends on a robust payment infrastructure. Card networks provide the technological backbone for routing and settlement, while payment gateways and processors enable transaction initiation and authentication.
Institutions such as the National Payments Corporation of India contribute indirectly by strengthening India’s overall digital payment ecosystem, setting security standards, and promoting interoperability. While NPCI primarily focuses on account-based and real-time systems, its role in enhancing payment security and innovation supports complementary card-based transfer mechanisms.

Use Cases and Applications

Card-to-card fund transfers serve specific use cases within the Indian financial system. These include person-to-person transfers where only card details are available, emergency remittances, limited-value transfers for informal payments, and cross-platform digital transactions.
They are particularly useful for individuals who possess debit cards but may not actively use online banking or account-based transfer systems. For businesses and fintech platforms, card-to-card transfers offer an additional channel to reach customers and facilitate payments.

Impact on the Indian Economy

At the macroeconomic level, card-to-card fund transfers contribute to the diversification of digital payment options. By offering an alternative to cash and traditional bank transfers, they support the broader objective of reducing cash dependence and improving transaction efficiency.
Although their overall volume remains smaller compared to dominant systems, card-based transfers enhance financial inclusion by providing additional access points to digital finance. They also promote transparency and traceability in transactions, supporting formalisation of the economy.

Advantages of Card-to-Card Fund Transfers

The key advantages of card-to-card fund transfers include:

• Convenience through minimal information requirements
• Speed with real-time or near real-time settlement
• Accessibility for users familiar with card usage
• Integration with existing card infrastructure
• Support for digitalisation of payments

These benefits make card-to-card transfers a useful supplementary payment mode within India’s financial system.

Challenges and Limitations

Despite their advantages, card-to-card fund transfers face several limitations. Transaction costs may be higher compared to account-based systems. Security risks such as card data compromise and fraud require strong safeguards. Regulatory restrictions and interoperability constraints can also limit scalability.
Additionally, widespread adoption is constrained by the dominance of alternative digital payment systems and limited consumer awareness. Addressing these challenges requires continuous technological enhancement and regulatory clarity.