Monday, February 2, 2015

Government pushes use of RuPay cards with cashback offer



The government, which is striving to take banking to every household in the country and reduce the number of cash transactions, is aggressively promoting the use of state-backed RuPay cards by offering 1% cashback, in a direct challenge to card companies such as Visa and MasterCard.

RuPay is an Indian domestic card scheme launched by the National Payments Corporation of India that can be used at ATMs, PoS terminals and e-commerce websites. Apart from all public sector banks, regional rural banks and co-operative banks issue RuPay cards in an effort to promote financial inclusion. Other countries have encouraged the use of plastic money by incentivizing people through cash-back and lower tax.

"South Korea had offered similar encouragement and the result was phenomenal," said AP Hota, managing director and CEO, National Payment Corporation of India, adding, "There are places where if you pay by card, tax on goods is lowered." Under the Pradhan Mantri Jan-Dhan Yojana, the number of accounts opened was 11.5 crore as of January 17 after a survey of 21.02 crore households.

Of the total bank accounts opened, 3.23 crore have deposits worth Rs 9,188 crore, finance minister Arun Jaitley had said on Tuesday. RuPay cards have been issued to more than 10 crore beneficiaries so far under the scheme as the government tries to move to a cashless society in the long-run. There is an overdraft facility under the scheme.

All RuPay cardholders under the Jan-Dhan scheme are eligible for personal accident as well as life insurance cover, the charges of which are lower than other cards in the market. But despite the lower processing fee compared with MasterCard and Visa, the RuPay isn't widely used as yet.

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