RuPay cards are gaining momentum as a domestic card payment network in India. The RuPay cards payment network is similar to international payment card networks like Visa International and MasterCard. The National Payment Corporation of India (NPCI), a Government of India undertaking, has launched RuPay cards in March 2012. Since its inception, this domestic network has started gaining momentum because of its ability to provide card payment network facilities to banks at a cheaper rate.
What necessitated Government starting payment network?
The international payment cards like VISA & Master cards have been charging heavily on card payment network services provided by them. With the introduction of RuPay cards, it has been able to provide transaction facilities to the extent of 40% cheaper than international networks. Thus, RuPay’s lower transaction cost helps Indian Banks to rapidly expand their card business to untouched markets of small towns and rural areas.
Benefits of issuance of RuPay cards by the banks:
The number of RuPay cards is growing day by day and it is expected to become visible in a big way in the near future. The RuPay card has following advantages.
- From Banks’ perspective, switching to RuPay from international channels like VISA and Master cards is cost effective as it leads to reduction in high transaction and settlement costs for the overall card payment channel.
- Emergence of RuPay in the card payment channel would play a major role in redistribution of market shares in favour of domestic card.
- RuPay’s lower transaction cost helps in the long run, the growth of card services to a larger market especially in emerging market, through increased competition.
- The International networks have so far not gained access to certain market segments such as micro payments, social benefit programs, and the reliance of the rural population on small financial institutions. The emergence RuPay in Indian Market gives it golden opportunity to cover this untouched market in a large scale.
- Through RuPay Kisan cards, farmers are now able to make electronic payments.
- By default, RuPay is a domestic card. RuPay is in the process of becoming an international card in collaboration with DFS Services Llc a US payment network. Once RuPay is becoming International card, it is predicted that RuPay like CUP (China’s UnionPay) would give tough completions in the Global card network market because of its cheap transaction and holding cost.
- NPCI also launched PaySecure for RuPay cards, an e-commerce system similar to’PayPal’ that allows secure online payments. Until now, these cards worked only at ATMs and point-of-sale terminals at retail outlets