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Monday, April 2, 2012

Indian "Rupay" is here - Visa / Master Card no more required

A few decades ago, debt was a bad word – a person owing money to others was looked down and frowned at ! – everything was bought by immediate payment of cash and only the local grocery trader gave things debiting you in his account book and collecting money later.

What a metamorphosis ? – now people no longer carry cash – worser still they don’t have or contemplate as to how it would come, but keep purchasing things – whether necessities or luxuries !!  Recently, there was news that Sweden which was amongst the first to use bank notes, could become the first Country to abolish the printed money.  For many, the World, especially the commercial transactions revolve on plastic money – the Debit Cards and Credit Cards – more of the latter.

It makes a fashion statement to have no. of Card cards dangling in one’s valet and more to have higher limits in each one of them.  How on earth would have means to repay – no body seems to care – neither the Company issuing Cards nor the person who takes them.  So, Visa and Master Card are household names – things without which many cannot exist !  There are some who so beautifully calculate their purchases in such a fashion that they enjoy maximum free credit and then there are those, who shift from one card to another – mind you that the rates of interest are applied on a monthly  basis and attract high slabs, with penalties of  course.

Visa Inc. is an American multinational financial services corporation headquartered on 595 Market Street, Financial District in San Francisco, California, which  facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit card and debit cards.  Visa does not issue cards, extend credit or set rates and fees for consumers; rather, Visa provides financial institutions with Visa-branded payment products that they then use to offer credit, debit, prepaid and cash-access programs to their customers. MasterCardis another  American multinational financial services corporation with its headquarters at  New York.  Together they rule the credit World. 

MasterCard and Visa said on Friday (30th Mar 12) that they had notified issuers of its credit cards of a potential breach of the security of customer accounts. Visa blamed a third company for the error.  Trading of the stock of Global Payments Inc., which processes credit card transactions, was halted after published reports said it was responsible. The stock fell 9 percent for the day before trading was stopped. Neither Visa nor MasterCard were to say how many customers were affected.  Generally no user cares for  such newsitems and keeps shopping till dead..

Here is some news of our local cousin ‘Rupay’ -the Indian domestic card payment network being set up by National Payments Corporation of India (NPCI) at the behest of banks in India. This project had been conceived by Indian Banks Association and has the approval of Reserve Bank of India. It aims to reduce the overall transaction cost for the banks in India, provide card payment service option to banks which are not currently eligible and shift the pattern of spending mode from cash to electronic payments. 

Soon, you will have full range of card payment services including Rupay, ATM, prepaid, and credit cards which will be accepted in India and abroad, across various channels like POS, internet, IVR and mobile etc. Initial focus of NPCI would be to approach those banks who have not been issuing any payment card at all. Regional Rural Banks and urban co-operative banks are ideal. In due course, it would approach other banks and enter the mature segments in competition with international card schemes who have already got a good presence.

“RuPay”  is a coinage which indicates coming together of ‘Rupee’ and ‘Payment’ to announce the launch of a new world-class retail payment system in India. The new system is simple to use, affordable, state-of-the –art and easily accessible even in the remotest corner of India round-the-clock.  It aims to be deeply rooted in India – a local card providing International facilities.  If the plans succeed in right earnest, it would  replace global payment players MasterCard and Visa in India.   The day when you carry the Rupay Logo and not Visa / Master card is not far off.  Rupay  aims at reducing the cost for the bank, and eventually the end user also would be facilitated by that. 

The indigenous version is no longer a dream – on 26th March 2012,  four large public sector banks State Bank of India, Bank of Baroda, Bank of India and Union Bank of India launched the first set of RuPay cards in India. The RuPay card is meant to be on the lines of China Union Pay-a Chinese government promoted payments and settlement platform for card transactions that broke the Visa-Mastercard stranglehold. First in debit cards where processing fees will be 40% lower and later in credit cards which will be launched from 2015. Although shops will be the initial beneficiary of lower debit card charges, it will ultimately benefit customers as it will make it viable for shops to accept card payments for even low-value transactions. Also low-margin businesses which refused to accept cards because of charges of around 1.8% at present will be incentivized to accept card payments.

So which card do you use ? and which Card will ‘the Famous Stars’ endorse on screen – the local Rupay or the International Visa / Master Card.

With regards – S. Sampathkumar


  1. You referred CUP or China Union Pay. Do you know that to reach to that success level, they have had guts to tell Uncle Sam that we are throwing Visa/MC out of our country and they did it. And they flooded the Chinese market with CUP cards and expanded globally wherever they have influential presence. Does our PM have guts and can he afford to tell Mr. Obama that Visa/MC are no more required here and I'm throwing them out?

    Secondly, the moment Rupay comes any close to Visa/MC in competition which has only one USP of lower rates, these giants will throw away the extra bps they are today taking, matching or lowering the price of transaction and keeping the issuing bank's interest safeguarded. And then the Rupay becomes just one another card in the valet. By no means, it can replace Visa/MC.

    just my 2 cents..

  2. Even if Visa/MC reduce rates, they'd at best be at par with RuPay. RuPay with more benefits for the issuing bank (no MG, no upfront) will still be preferred, as long as the technology is robust and banks have the right intent to promote it.