Visa, MasterCard now face a local rival — RuPay NPCI unveils debit card, credit card to follow

Visa, MasterCard now face a local rival — RuPay

NPCI unveils debit card, credit card to follow

India’s cheapest debit card, RuPay, was launched by the National Payment Corporation of India (NPCI) on Monday, bringing huge relief to banks and, to some extent, customers. RuPay is pitched in direct competition with plastic issued through Visa and MasterCard, and its charges are 40% lower compared with the latter’s. The RuPay debit card will be accepted at more than 91,000 ATMs and 6 lakh point of sale terminals in the country. “Our main focus is on rural and semi-urban areas to ensure financial inclusion. Banks generally need to pay at 20 to 30 basis points to the international service providers (like Visa and MasterCard). Here they will end up paying 10 to 15 basis points, which, in turn, reduces the cost by `200-300 crore for banks,” said A P Hota, managing director and CEO, NPCI. Banks have to pay Visa and MasterCard $50,000 (Rs.25 lakh) as participation fee, whereas RuPay’s services will be available at zero cost. Other charges — which are assessment and authorisation charges — will be subject to one-on-one negotiation with member-banks. The RuPay credit card will also be launched next fiscal. So far, five public sector banks (PSUs) — Bank of Baroda, Bank of India, State Bank of India, Axis Bank and Union Bank of India—have availed of this facility for its customers. The RuPay debit card will be available only for domestic transactions for now. The services will be extended internationally in the next fiscal. As of now, 2 lakh ATM and micro-ATM cards of RuPay are available across the country. “We are planning to issue 10 million cards by the end of the next fiscal,” Hota said. RuPay does not offer net banking services currently, but will do so in the next fiscal. RuPay will ultimately benefit customers, said M V Nair, chairman and managing director, Union Bank. “Sure, debit card transactions are not charged. But the cost for banks comes down so the benefit will percolate to customers. The charges of Visa and MasterCard are substantially higher due to which costs one way or the other gets passed to the customers.” K Ramakrishnan, CEO, Indian Banks Association, said RuPay will reach areas where financial inclusion is happening. “The benefit will be passed on to the customers by way of reduced customer charges.” However, according to G Padmanabhan, executive director, Reserve Bank of India, the importance of such a system lies in sustaining and taking it forward. They will launch credit card facility by fiscal 2013.