Are banks shying away from offering RuPay cards to affluent customers?

Paytm and Citi offering their first credit card on the Visa platform is just the latest example of how banks continue to have little faith in RuPay when it comes to the middle- and upper-income segments.

“The infrastructure is not there,” said Paytm head Vijay Shekhar Sharma and Citibank officials when asked why they chose to use Visa for the Paytm First credit card.

Although as many as 436 banks are RuPay-issuance banks, this is a common refrain among most bankers when asked why they still offer Visa or Mastercard to urban middle- and higher-income customers.

“We always offer RuPay cards. It is a matter of national pride, but it also depends on the customer profile. Customers who travel abroad, even if it is once a year, prefer to have some other payment service, as the acceptance is much higher across countries and continents,” said a private banker, who did not wish to be named.

Rewards programme

Another banker said that the interchange fee and rewards programme for RuPay is not quite attractive. “RuPay is a part of our bouquet, but when customers choose a credit card or even a debit card, they look at the kind of rewards and points on offer. In this, Visa, Mastercard and Amex tend to come ahead,” he said.

However, the National Payments Corporation of India (NPCI), which launched RuPay, says this is more of a perception issue and that RuPay has more than adequate infrastructure and benefits, compared to the more-established peers. “We operate in all parts of the pyramid, including the Pradhan Mantri Jan Dhan Yojana. There is a risk of being positioned in one part because you are the only player in that part. But the fact is that nearly 50 per cent of our base is in the mid- and top-end segment,” said Praveena Rai, Chief Operating Officer, NPCI.

Launched in 2012 as a domestic multilateral payment system, the initial task of RuPay was to get the back-end and issuance infrastructure in place. Speaking to BusinessLine , Rai stressed that the acceptance of RuPay is now fully in place.

“Today, nearly 30 lakh merchant terminals are RuPay-enabled, and we have 90,000 online merchants,” she said, adding that there are more than 1,100 offers, across dining, shopping, and entertainment categories, as well as airport lounge access.

According to NPCI data, more than 1,100 banks have been on-boarded into the RuPay Card Program, and have issued more than 60 crore cards. The RuPay card base in the mass and affluent segments touched 32.5 crore in 2018-19.

RuPay market share

In the last four years, RuPay has gained nearly 58 per cent of the issuance market share. The transaction share in volume and value terms is currently at 30 per cent of the market share, and is seen to pose serious competition to Mastercard and Visa.

Rai also counters claims and said the interchange fee is on a par with the market and the switching fees for RuPay is lower than the market.

For international customers, RuPay also issues RuPay Global Cards on the Discover Network. Between 2014 and March 2019, it has issued 6.4 crore such cards. The acceptance of RuPay Global cards with the partnership of Discover reaches over 4.1 crore merchants, across 190 countries, added Rai.

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