RuPay is India’s home grown card scheme, brought to reality by the National Payment Corporation of India. Founded on March 26, 2012 it competes with the likes of Visa and MasterCard. Currently RuPay has a market share of around 35%, making it the second largest card scheme in terms of numbers (Visa has over 50% of the cards in the market). In this post I will be discussing about RuPay cards.
The name has come from two words Rupee and Payment. The three colors orange, green and blue with a white background speaks for itself (Colors of the Indian National Flag).
Orange and green in the logo shows that the nation is moving towards growth supported by a fast paced service to the growing nation. Blue indicates trust, peace and security which the people get as a feeling when they own this card.
National Payments Corporation of India was formed in December 2008 and promoted by
- State Bank of India (SBI)
- Punjab National Bank (PNB)
- Canara Bank
- Bank of Baroda (BoB)
- Bank of India (BoI)
- Union Bank of India (UBI)
- Investment Credit and Industrial Corporation of India (ICICI Bank)
- Housing Development Bank of India (HDFC Bank)
- Citi Bank
- Hongkong Shanghai Banking Corporation (HSBC Bank)
It provides services like NFS (National Financial Switch), the Immediate Payment Service (IMPS), National Automated Clearing House (NACH), Aadhaar Payment Bridge System (APBS), RuPay, etc.…
I will discuss about NPCI in detail in my next post.
What motivated NPCI to start RuPay Cards?
As RuPay cards is completing three years in the Indian Market, it is necessary to know what made National Payments Corporation of India to start RuPay cards.
- Near Duopoly by Visa and MasterCard: – The two giants have dominated the electronic payment market in India. Over 95% of the transactions in India were done over these gateways.
- Non-Issuance of ATM cards by small and co-operative banks: – As Visa and MasterCard charge exorbitant fees from the banks as joining fees, most banks did not find it viable to invest a huge sum to provide ATM services.
- Charge from the customers: – Some retail outlets, charge around 2% per transaction from their customers as outlet owners find it difficult to make their business viable by paying huge transaction fees.
- Motivated by China’s Union Pay and Japan’s JCB: – These are two payment gateways run by their respective governments, have helped them achieve their goals with their sincere efforts. China’s Union Pay is the world’s second largest payment scheme in terms of transaction value.
- To serve the RBI’s vision to provide a domestic, open loop and multilateral system in electronic payments to all banks and financial institutions in India.
Benefits of RuPay Cards
- Low transaction costs: Transaction through RuPay is 90 paisa per transaction irrespective of the value of the transaction. This fee is charged collectively from the merchant’s bank account and card issuer’s bank. Visa and MasterCard charge around 2% per transaction.
- No Joining fees: Unlike Visa and MasterCard, RuPay doesn’t charge a single penny for joining the RuPay Payment Scheme.
- Quicker transactions: As the transactions are done locally, the settlement process is faster than its rivals.
- Data: Customer information is not let out to other countries as the data is secured in India locally.
- EMV: This stands for Euro Pay, MasterCard and Visa which have set up standards to provide high class secured chip based cards. RuPay has partnered with Discover Financial Services (DFS) to provide EMV based RuPay cards. These cards demand a pin for completing the transaction at every Point-Of-Sale (POS).
- A partnership was struck between Discover Financial Services (DFS) and National Payments Corporation of India (NPCI) such that Discover and Diners Club cards are accepted in all NFS ATMs in India and RuPay Global cards would be accepted for international purchases and cash transaction at Discover, Diners Club and PULSE network across all POS terminals worldwide. (They have over 25 million merchants worldwide in almost all nations in the world).
- NPCI has partnered with Acculynk to provide secure encryption and authenticated consumer PIN for all its customers for e-Commerce purchases under the brand RuPay PaySecure.
- Indian Railway Catering and Tourism Corporation (IRCTC) has partnered with Union Bank of India (UBI) and NPCI to book tickets and other services using RuPay prepaid cards which have a top-up limit of Rs. 50,000.
- Japan Credit Bureau International (JCBI) and NPCI have entered into an alliance in which JCB cards would be accepted at all POS terminals and NFS ATMs in India in return for which the NPCI member banks can issue RuPay/JCB cards which would be accepted at all POS terminals in the JCB network worldwide.
- China’s Union Pay and NPCI have struck a deal such that CUP cards will be used at all RuPay POS terminals in India.
- Partnership of NPCI with Oxigen group to launch OxiCash Money Transfer which makes Oxigen Wallet India’s First Non-banked Mobile Wallet to provide Instant Money Transfer Service without hassles.
Pradhan Mantri Jan-Dhan Yojana and RuPay
Shri Narendra Damordas Modi, on his first Independence Day speech declared scheme for bringing about financial inclusion in India by bringing the un-banked population in the banking ecosystem. Features what an account holder would receive
- Zero balance Account.
- Free RuPay Debit Card.
- Rs 1, 00,000 life cover and Rs 30,000 accidental cover by Life Insurance Corporation of India (LIC).
- Overdraft facility of Rs 5000 for each account.
RuPay Payment Scheme benefitted the most from this scheme. The adoption of RuPay cards increased drastically in India making it the second largest Payment Card in India with around 35% market share. Over 25% of the transaction in India is done using RuPay cards across ATMs, POS terminals and e-Commerce Platforms.
Ø The duo-poly in India is now a story of the old. Now there are three significant players in the payment card market, namely Visa, MasterCard and RuPay in India.
Ø It has 18 prepaid instruments on board who issue RuPay prepaid cards.
Ø RuPay cards are issued by 27 Public Sector Banks, 13 Private Banks and over 250 Co-operative & Gramin Banks. RuPay was a boon to the co-operative banks and its customers due to minimal cost in issuing RuPay cards.
Ø It has won many laurels for itself like “Renaissance Skoch Award” for building country’s own and the fastest adopted card system in the world.
Ø It has broken all records by building a payment gateway in less time, whereas it usually takes around five years to make a fully functional payment system.
Ø It has partnered with Kochi Metro to provide RuPay card services at all its station in the metro network.
Ø RuPay debit cards were issued by the Punjab Government to all commission agents for quicker payments through the ‘Kisan Arthia Information and Remittance Online Network’.
Ø RuPay prepaid cards were issued to AMUL farmers under the brand ‘Kotak Samriddhi’ for direct transfer for their daily produce.
I wish RuPay cards all the best for its bright future and its next biggest endeavor, issuance of RuPay credit cards, making it a fully fledged card scheme and giving a stiff competition to US giants Visa and MasterCard.
Please don’t forget to subscribe to my newsletter if you liked this post (I won’t trouble you much). Download my new eBook titled “25 Years of privatization in Indian Television Industry” by clicking on the link in my blog. It speaks about the entry of transnational and domestic players in the broadcasting space ending the monopoly of the government-run DoorDarshan since 1991.
Share on Facebook, Twitter and Google Plus (It takes less than two minutes to do so). Share your views in the comments window below.