The National Payments Corporation of India (NPCI), which developed the country's home-grown card payment system RuPay, has attributed the system's rapid growth to the insurance cover it provided to its card-holders.
Rupay, which became operational from 2012, have rolled out 206 million cards (as of September-end), acquiring a sizeable market share within a short time.
Of the 206 million cards, 160 million is for bank accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY).
"The opportunity was given because of RuPay's inherent strength," said A.P. Hota, CEO and managing director of NPCI.
"The government had weighed and evaluated all card payment systems. At that time, the RuPay card had an inbuilt accident insurance of Rs 1 lakh. When the PMJDY scheme was launched, it was thought that along with the opening of accounts let people have an access to accident insurance. Then (Jan Suraksha) insurance schemes were not present. So, the government chose RuPay by its intrinsic strength," Hota said.
RuPay competes with Visa and MasterCard in India.
Hota said NPCI's non-profit characteristic was another factor behind its growth.
"NPCI is not a profit-making company. All operational benefits go to the same banking community who pays the fees," he said.
Hota said the revenue stream from its different verticals - card payment, Aadhar-based services and mobile-based interbank immediate payment service (IMPS) - were adequate to fund the introduction and upgradation of the payments technology.
NPCI is working on upgrading and simplifying the existing IMPS system, which is likely to take shape by January.
"In IMPS you can send money instantaneously. But suppose one would like to collect money instantaneously. That would be possible in the new system. We have also tried to dissociate authentication and identity verification. Registration formalities have been tightened. Also, the payment processing service provider is not necessarily your bank. An account can be with one bank but the transaction routing can be through another bank," Hota said.
Eleven banks, including Union Bank, United Bank of India, Bank of Baroda, HSBC, HDFC and ICICI have shown interest in participating in the project. NPCI is also in talks with the SBI, which has the largest bank network.
"This requires regulatory clearance. For the last 45 months we have been in touch with the regulator and are clarifying their questions. We hope to secure approval soon. We will start with a few banks and expand gradually," he said.
NPCI is in the process of bringing in district co-operative banks and regional rural banks under the IMPS network.