Close on the heels of Prime Minister Narendra Modi's visit to China, India's National Payments Corporation of India (NPCI), which runs the RuPay payment card network, has received the Reserve Bank of India's approval to tie up with the Chinese government-supported payment card network China UnionPay International.

This will allow Chinese tourists and people working in India to be able to use automated teller machines (ATMs) and point of sale (PoS) terminals in India to withdraw cash in the Indian currency.

This could offer healthy competition to global players such as the US-based MasterCard and Visa, which offer services in India but not in China.

China has its own local card payment system managed by UnionPay International, which is not supported by Visa and Mastercard, which is why Chinese customers cannot use their cards in India as of now.

NPCI Chief Executive AP Hota said the two sides have signed a memorandum of understanding, but were still working out the details of the tie-up.

Under the approval, China UnionPay's cards will be accepted at all the ATMs and point of sale terminals in India through NPCI's network, Hota said.

About 2 million Chinese tourists visit India each year. NPCI has a network of 1.1 million PoS terminals and 195,000 ATMs in India, which can be used by customers from China, Hota said on the sidelines of an NPCI event.

Last year, NPCI had signed a similar agreement with Japan’s JCB International.

“The commercial and technical agreements with both the Japanese and Chinese payment processors are to be finalised, following which we will open services to the people of both these countries by March 2016,” Hota said.

NPCI, which is backed by RBI and processes India's retail transactions, will also launch a credit card in early 2016.

At present, the number of RuPay card issuance has grown to over 160 million.

NPCI has also launched RuPay Platinum Debit Card to further its card payment network.

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