Monday, December 5, 2011

Aadhar card may be used to identify telecom customers - Rupay card

Rupay Card Logo
Source :

The Unique Identification Authority of India (UIDAI) plans to allow telecom service providers to use Aadhar cards to verify the identity of cellular phone customers shortly.

"We will soon allow telecom service providers to use the unique identification number to verify identities of their customers. We would like to have proof of concept validation with telecom service providers like Vodafone and Airtel for the same," UIDAI's Chief Product Manager Sanjay Jain said.

Incidentally, the project has been witnessing a backlog due to the huge volume.

"We have been enrolling around one million people a day. Filed enrollments are happening at a slower rate. The backlog is due to infrastructure related issues. But we hope to resolve these as soon as possible," he said.

The authority is keen on authenticating online transactions made through smart phone eventually, though no details were revealed.

"UIDAI is an application platform. Both banks and telecom service providers are welcome to use this platform and build their systems around it," he said.

The authority is also looking at whether it must work with the National Population Register (NPR), which is a project run by the Registrar General of India (RGI).

"We have not decided if we should work with the NPR. We may do it if and when we decide to do so," he said.

Incidentally, the National Payments Corporation of India (NPCI) has been advised to introduce RuPay cards, which compete with VISA and Mastercard, under the Aadhar Enabled Payment System (AEPS). Besides, ATM transactions too would be authenticated by the UIDAI.

UIDAI, along with NPCI, has already piloted Aadhaar- enabled Payment System in Jharkhand, and over 60 banks have registered to be part of this network, sources said.

Monday, October 31, 2011

Visa confident RuPay entry won't affect its dominance: Uttam Nayak, Country Manager, Visa

Source :

Global payment gateway Visa is confident that the entry of domestic payment network RuPay will not hurt its business in India. In an interview with Sangita Mehta, Visa's country manager, Uttam Nayak, talks about trends in the card industry, challenges for Visa and its plans to launch mobile payment product in India. Excerpts :

What are the trends in the cards industry?

On the credit card side, the focus is on premium customers. Focus is moving away from card numbers to profitable customers. Inactive card is draining a lot of their resources. So, the idea is to get fewer customers who use the card and that is where banks earn revenue. That is why there is attrition of cards by 7%, but transactions have grown 19% and spends have risen 30%.

All non-profitable, delinquent and inactive accounts have been closed. Also, a couple of players have exited and few others have slowed down. The big success has been on debit and prepaid cards. As banks continue to open new accounts, debit card issuance also grows. The growth is about 25% a year. People are using lesser cash and transacting more at point-of-sale and internet. Cash to cash-less migration is happening. E-commerce is growing for services such as buying movie tickets or paying bills.

What are the changes that are emerging on the payments side?

We have witnessed two big changes. One is the power of mobile. The frauds have gone up in the market such as counterfeiting at ATMs or point of sale. However, with SMS alert mandated by the regulator and the minute a card is misused the customer gets an SMS alert. Also, mobile payment and mobile banking and mobile way of transacting are significantly increasing. The second change is the increase in online transactions.

So isn't this a challenge for Visa?

We welcome it. To get physical point-of-sale terminal costs more money while online acceptance is much cheaper.

What are the challenges for you with Interbank Mobile Payment System (IMPS) kicking in?

It is account to account transfer and it is early days. One has to wait and see how it picks up.

So it has yet not affected your business? How is Visa gearing to meet competition from National Payments Corporation of India on IMPS?

One of the key things a customer looks for is frictionless payment. We had rolled out mobile payments in some countries and it failed or did not take off, because it had a lot of friction.

If Visa rolls out any such product will it be without any friction?

Absolutely. We are currently rolling our mobile payment product, which is a joint venture with Monetise. It addresses this point of being frictionless and customers don't need to provide any other piece of information. It will be rolled out end of this quarter or early next year.

National Payments Corporation of India will soon launch RuPay card, what would be the challenges for you?

There is no challenge. Visa and MasterCard have existed for 30 years and we have put all our might in what we call are priority market. Yet, if there is only 3% penetration that means that efforts have not been enough and investments have not been enough. So, more players have to come in. Where I look for answers is the kind of investment they are going to bring in.

There could be a fear that even this 3% could go to them?

The customer looks for convenience, security and reliability and NPCL has to say they have it. The customer has to touch and feel and see it. 

Given that it is PSU-promoted and they control 70% of the market share, could significant portion of customers shift to RuPay?

Customer looks for newer and superior products and value addition and that is where they will shift. And that is our core strength. We are innovative and have attractive marketing campaign. We have consumer insight and use that information to come up with better products. So, as long as we keep doing that we don't see any competition as a threat. If that was the case, we would not be making a significant investment in this country. The mobile platform is a joint venture and we have put a lot of money to develop it.

That could be in response to RuPay coming in?

No. It's part of our strategy. We have been here for 30 years, and consistently Visa has been investing and growing in this market.

Tuesday, October 4, 2011

Rupay Card Launch Date - Rupay Card launch by fiscal end: NPCI

Source :
Nearly a year after the soft launch as a limited-service debit card, the Rupay Card, which is the domestically developed equivalent of the Visas and MasterCards of the world, will offer full-service debit card services by the end of this fiscal. 

"We hope to commercially launch the Rupay Card before the end of this fiscal. We will be equipped to offer full service debit cards to our mainstream partner banks by February or March next," National Payments Corporation of India (NPCI) MD and Chief Executive Abhaya Prasad Hota said. 

"By then, we hope to integrate our software with the nearly 4.5 lakh merchant terminals across the country," he said. 

NPCI, set up by the Reserve Bank, has developed the Rupay Card in April. In 2009, RBI had asked the Indian Banks Association to launch a not-for-profit company and design a rival card to Visa and MasterCard. China has already developed a similar card called the Union Pay of China. 

Since April, the Rupay Card has been in use, mostly by rural and urban cooperative banks offering limited service. 

NCPI has so far roped in four banks -- two urban cooperative banks, one regional rural bank, and one mainstream commercial bank, Bank of India, which has issued this card to its financial inclusion customers. 

Hota said that five more banks, including mainstream banks like Corporation Bank and Syndicate Bank, are testing the card now and the former will complete the process by next week. 

The Rupay Card, once commercially launched as a full service debit card, would eventually replace global real-time payment processing leaders--Visa and MasterCard --from the domestic payment system, the NPCI head said. 

Hota further said that leading financial consultancy firm Ernst & Young India is assisting NCPI in developing and rolling out the national payment switch (NPS) software that is needed for the commercial launch. 

On delay for commercial launch of Rupay Card, NCPI chief Hota said that there are over 4.5 lakh merchant terminals in the country and without altering the software of these terminals, a national launch cannot take place. 

"We have to individually feed our software into these merchant terminals. But remote tweaking can be done only on around 40,000 of them. The rest have to be done individually. 

Out of the 4.5 lakh PoS (point of sale terminals), around 80,000 are cash machines and can thus be tweaked remotely. 

Thus around 1.2 lakh units will be ready for our software by next month," Hota said. 

For the rest of the PoS terminals, the corporation has already formed teams to go around the country to do the changes, he added. 

On the commercial fees that NPCI would be charging from the banks for the card, he said, "We plan to charge only 0.3 per cent of the transaction amount as our fee, as our objective is not immediate profit-making but popularising the card." 

Visa and MasterCard charge much higher than 0.3 per cent, but Hota did not specify the number. 

These foreign operators could not be contacted to check our their fee structure.
According to Hota, payments that banks pay to these overseas payment gateways is around Rs 400 crore annually. 

Today domestic banks have no option but to tie up with Visa or MasterCard for connectivity between cardholders, merchants and issuing banks not just within the country, but across the globe in the absence of a domestic card. 

In 2010, according to RBI data, domestic banks paid around Rs 500 crore as fees to these global card firms for processing their payments, 90 per cent of which were domestic transactions. 

Hota is hopeful that NPCI can make the card break-even within two-five years of commercial launch. 

The member banks have already invested around Rs 100 crore so far in the project. Of this, Rs 60 crore have gone into developing the Rupay Card and building the NPS network, Hota said. 

Hota also said he does not have immediate plan to enter the credit card space, saying that will involve tying up with external payment gateways, which would push up charges. 

"Hopefully we may be able to do that from the fourth year onwards. But our priority is the debit card segment now. 

Also, the full service debit cards will be only domestically operable as international debit cards will be costly for the banks." 

But he pointed out that as much as 95 per cent of the debit card transactions are done within the country only. 

Another area that NPCI is evaluating is the pre-paid cards market, which include travellers cards, gift cards and salary cards. 

As per the latest RBI data, debit card transactions rose 45.6 per cent in June to Rs 3,784 crore in June from Rs 2,597.5 crore y-o-y. There were over 23.95 crore debit cards in use in the country as of June 30, up 24.8 per cent over 19.19 crore in the year-ago period. 

Against this, credit card transactions rose 30 per cent in the month to Rs 7,191.11 crore, from Rs 5,538.75 crore y-o-y, despite a 6.7 per cent drop in the number of credit cards in circulation to 1.76 crore during the month. 

As per the data, credit card deals during the first quarter of this fiscal stood at Rs 22,127.5 crore, as against Rs 16,948 crore y-o-y, a jump of 30.5 per cent.
In 2010-11, transactions through credit cards went up 22.15 per cent to touch Rs 75,516 crore, while debit card transactions rose 46.46 per cent to Rs 38,692 crore. 

NPCI is registered as a company with nine public sector, private sector and foreign banks owning stakes. RBI will oversee its operations in initial years, but will be regulated by RBI throughout.

Friday, September 30, 2011

Move over Visa, MasterCard. IndiaPay (now Rupay Card) is here

Rupay, the country's first indigenous payment gateway, is set to take on the global big boys - MasterCard and Visa - when it launches in the middle of next year.

The National Payments Corporation of India, the owner of Rupay, will fire the first salvo by charging only half what MasterCard and Visa levy on merchant establishments.

At present, merchant establishments are charged Rs 2 for every transaction worth Rs 100.

A card's issuing bank gets around 80 per cent of that, while the merchant's bank or acquirer bank gets 15 per cent.

The service provider gets the remaining 5 per cent. The cost of card usage, if borne by a merchant establishment, could eat up 50 per cent of its profit.

That is seen as factor for the low acceptability of cards among small and medium merchants.

Observers ask if NPCI halves the transaction charge, why banks would issue Rupay cards when it's a losing proposition for them.

The reason is simple: if merchants have to absorb a lower transaction charge, they will increasingly insist on Rupay.

"We expect merchant demand for the product will force banks to adopt Rupay Card," said a source.

Still, there are several issues that need to be sorted out before Rupay gains acceptability.

Firstly, point-of-sale terminals, in which banks have made huge investments, are configured for MasterCard and Visa cards.

But NPCI is confident that this problem can be solved, as it has the backing of the government.

Rupay's shareholders consist of 10 banks, six of which are public sector banks. It is promoted by the Reserve Bank of India.

The government and the central bank want to promote transactions channelled through banks, rather than in cash, which is an inefficient mode of payment.

Money lying as cash in the hands of an individual does not have any multiplier effect, but can be leveraged if it is with banks. 

Around 95 per cent of transactions in India are still carried out in cash, and studies suggest underutilisation of debit cards.

According to a technical paper by Ashish Das and Rakhi Agarwal of the Indian Institute of Technology, Bombay, though there are 19 million credit cards and 190 million debit cards in the system, there are just 11 transactions per credit card and one transaction per debit card a year.

The study further says there are 500,000 point-of-sale terminals in the country. On average, a terminal sees less than one debit card transaction and 1.3 credit card transactions a day.

Studies have also found a correlation between efficiency in monetary transactions and increase in economic growth.

A 10 per cent increase in card payments can contribute 0.5 per cent to GDP growth. And that is what the government and the banking regulator is aiming for.

NCPI is planning Rupay Card only for debit cards to encourage and increase their use among Indians.

The risk-free nature of debit card transactions, compared to those of credit cards, is considered more suitable for Indians, most of whom are seen as risk averse. 

Launch details of Rupay Card

The National Payment Corporation of India Ltd (NPCI) is planning to come up with India's first domestic payment service provider 'Rupay'. The 'Rupay' ATM card is aimed to target no frills account holders (NFAs) in collaboration with banks.

with this venture, majors in the payment space namely Visa and MasterCard are set to receive the first domestic competitor in Indian system.

All banks have been asked to open no frills accounts as part of the financial inclusion drive of the government.

NPCI aims to leverage on ATM switching infrastructure (the National Financial Switch) which will enable 'Rupay' cards to be used only on ATMs and biometric micro ATMs.

"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.

"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.

Speaking about competition with Visa and MasterCard, he said, "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."

In this regard NPCI seeks to collaborate with the 82 regional rural banks (RRBs) of the country too.


After almost two years of planning, the National Payments Corporation has at last finalised the proposed unique India Rupay Card which once commercially launched would be an domestic alternative to the global real-time payment processing firms like Visa and MasterCard.

"We have finalised name of the proposed card as Rupay at our board meeting here today. We have also finalised the logo for the same," a senior official of the RBI-set up National Payments Corporation of India (NPCI), told PTI this evening. The official sought not to be named.

The official further said the leading financial consultancy firm Ernst & Young(E&Y) will develop and roll out the entire architecture, including the design and software for the Rupay card rollout.

A senior E&Y official confirmed the development to this agency. He further said, the NPCI will initially launch a domestic ATM/debit Rupay cards to begin with and then would hit the credit card market later on.

In 2009, the RBI had asked the Indian Banks Association to launch a not-for-profit company and design a rival card, then tentatively called India Card (Rupay Card), that meets the requirements of the domestic banks.

And finally, RBI plan is materialising and Rupay will be like the Union Pay of China, which is the domestic real-time payment processing firm for Chinese banks, and was planned to be launched last year.