Data Focus. Mastercard imbroglio may turn into golden opportunity for RuPay

The recent embargo on Mastercard from onboarding new domestic customers on its card network could prove to be a golden opportunity for domestic card player RuPay, which has till now been lagging in terms of credit card issuances.

A product of National Payments Corporation of India, RuPay was launched in 2012 as the country’s domestic card payment network.

At present, it is the market leader in terms of overall card issuances but lags behind in credit cards and spends.

Data with the Reserve Bank of India reveal that by November 30, 2020 there were 60.36 crore RuPay cards issued and it had a total market share of over 60 per cent of the total cards issued.

But a significant proportion of RuPay cards is in the nature of debit cards with only 9.7 lakh credit cards issued as on November 30, 2020.

Market trends indicate that Visa has the second largest issuance of cards followed by Mastercard though there is no official data.

With most banks bullish on credit card acquisitions, the ban on Mastercard meant they are looking for other tie ups and partnerships.

RuPay and Visa are the only two payment companies that continue to operate without any restrictions on onboarding new customers and capturing not only issuance but also spends is a key focus for most payment players and lenders.

Experts believe that this could prove to be an opportunity for RuPay to expand its market share in credit card issuances.

‘Huge hole’

“The embargo on Mastercard has left a huge hole in the market, especially in the mid-income consumer segment. Mastercard was the fastest growing credit card offering in the country and this could prove to be a golden opportunity for both Visa and RuPay. It is difficult to say which of the two players would have the greater advantage but Visa’s offering may be more sophisticated in terms of marketing. RuPay, however, has come up with great infrastructure,” said Mathew Chacko, Partner, Spice Route Legal.

The issue of zero MDR could prove to be slightly challenging for RuPay, he said.

But in an indication of its wider reach and acceptance, there are 1,158 issuer banks for RuPay cards. The NPCI has also been working on tie ups to ensure that it has a global acceptance, which many banks have seen as a challenge for customers in the higher income categories.

According to a recent Nomura report, credit card issuances increased by 9.1 per cent year on year to 6.23 crore by May 2021 with outstanding spends per card registering a 3.1 per cent growth to ₹16,700.

Lenders like YES Bank have indicated that their credit card acquisitions would be impacted by anywhere between 75,000 to 1 lakh over a three month period due to the Mastercard ban.

With most realising the need to have atleast two partnerships in place for card issuances, RuPay could gain quite a bit as it is unclear when the embargo on the other players will be lifted.

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