India on Wednesday approved a Rs. 1,300 crore plans to promote domestic RuPay debit cards and low-value digital transactions to increase their use among disadvantaged people, in a move that could challenge the influence of banks competitors like Visa and Mastercard.
Under the plan, the government will pay banks a percentage of the value of transactions made through the bank RuPay Debit cards and one-year low-value direct interbank transactions, which have been pushed back to April 2021, a government statement said.
This plan could further threaten rivals’ domestic market share Passport and Master Card. Earlier this year, Visa complained to the US government that India’s “unofficial and official” promotion of RuPay was hurting it in one of the country’s key growth markets.
The program will include refund of processing fees for digital transactions up to Rs. 2,000 rupees, government officials said.
“It will also help make digital payment methods accessible to the unbanked and the marginalized,” the government said, referring to those outside the financial and banking systems. official goods.
The Payments Council of India, an industry body, said the sector would “benefit greatly from this initiative”.
As of November 2020, more than 600 million RuPay debit cards have been issued by banks.
Deepak Chandnani, South Asia and Middle East director of Worldline, a payment and transaction services company, said the move would give RuPay a significant boost.
“An acquiring bank incurs closing costs of about 15 basis points per transaction for processing and other costs for debit card transactions,” said Chandnani. provide much-needed funds for banks to buy back and incentivize further digital transactions.”
Started in 2012 by the National Payments Corporation of India (NPCI), a government-backed nonprofit, RuPay competes with Visa and MasterCard for the rapidly growing digital transaction market. in Asia’s third largest economy.
Finance Minister Nirmala Sitharaman has publicly asked banks to promote RuPay cards to promote digital transactions in the country.
Mastercard and Visa see India as an important growth market, but have been constrained by a 2018 central bank directive that they store payment data “in India only” because of “supervisory access”. unregulated surveillance”.
Banks are currently banned from issuing Mastercard-branded cards to new customers after the US payments giant was found to not fully comply with data localization rules.
© Thomson Reuters 2021
