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Global payment processing companies — MasterCard Worldwide and Visa Inc — had better sit up and take notice. An Indian rival is threatening to give them a run for their money.
The National Payment Corporation of India Ltd (NPCI) is trying to break the stranglehold of these companies in the payments space by seeking to launch home-grown ‘Rupay' ATM card for no-frills account (NFA) holders in association with banks.
As part of the financial inclusion drive, banks have been asked by the central bank to open NFAs, with nil or low minimum balances and charges, and have limited facilities such as small overdrafts.
NPCI is banking on its ATM switching infrastructure (the National Financial Switch) so that banks can issue ‘Rupay' cards, which will work only on ATMs and biometric micro ATMs.
Card issuance will begin in a couple of months. NFA accountholders can draw money at the ATMs of any bank with the proposed cards.
“As of now we are talking to four nationalised banks for introducing the Rupay ATM cards, which they will, to begin with, issue only to their no-frills accountholders. It will be a debit card which will work only on ATMs and biometric micro ATMs,” said Mr A.P. Hota, Managing Director and Chief Executive Officer, NPCI.
Unlike the huge fees that banks have to pay global payment companies for processing payments between the banks of merchants and the card issuing banks, the Rupay's unique selling proposition will be that banks will only have to bear the minimum charges, he explained.
“Banks will have to weigh whether to give ‘Rupay ATM cards' only to new customers or also to old customers. They will have to write to customers giving them the option to surrender existing cards and get new ATM cards. This itself is a big job,” said Mr Hota.
Referring to the fact that the country is large and the market big, the NPCI chief observed that there was place for all — Visa, MasterCard and Rupay as well — in the Indian marketplace.
“Ultimately, the winner would be the one who can offer the better product and better service at an affordable rate. If MasterCard and Visa can really provide service at an affordable rate, they will succeed. To beat NPCI or Rupay card, they might really lower their price drastically. And if they can sustain that for a decade, really NPCI is out. We have better things to do,” said Mr Hota.
RRB tie-up
NPCI will also be talking to 82 Regional Rural Banks (RRBs) to introduce the Rupay brand of ATM cards. This will enable RRB customers in the rural and semi-urban areas to also have the convenience of accessing modern banking channels.
NPCI is a non-for-profit company set up in 2009 as an umbrella institution at the behest of the RBI for managing all the retail payment systems in the country.
It has 10 shareholders — State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC.
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