Wednesday, March 4, 2015

NPCI to come out with virtual form of RuPay debit card

After launching the RuPay debit card, National Payments Corp (NPCI) is set to come out with its virtual form in the next few months, a move that will give further push to smartphone-based transactions.

"We are planning to go for pilot of a virtual RuPay card over the next 4-5 months," NPCI Managing Director and Chief Executive A P Hota said here today.

 

NPCI is the nodal agency for all retail payment systems under the Jan Dhan scheme.
The physical plastic RuPay card carries a 16-digit number. Under the virtual form, there will be no need of a physical card and a transaction can be done with the help of the 16-digit number alone.
The initiative will enable all account-holders send and receive money from their smartphones with a single identifier which may include the Aadhaar number, mobile number or virtual payment address without entering any bank account information.

Average value of the card payment system per head as on date was Rs 1,500 and an average remittance stands at Rs 2,500. Under the new virtual system, the amount would be much less and may include school fee and grocery payments, he said.

The proposed payments banks are likely to provide this virtual card facility from the beginning, Hota said. "The specifications standards are now available for payments banks and hence it is a great opportunity for them."

Around Rs 8,000 crore worth of transactions are taking place through IMPS (immediate payment service) per month. What we are doing now is just putting another extra layer on the already existing system so as to make transaction more easy, Hota explained.

Currently, only around 20 per cent of the total transactions are happening through IMPS and hence NPCI is working on further simplification of the facility so as to make it more popular in future, he added.

Talking about authentication system for the virtual RuPay card, former Chairman of UIDAI Nandan Nilekani said "with everybody having cellphones, going forward the single- factor authentication can be the cellphone, replacing the physical cards."

"Later, Aadhaar-based authentication will come on mobile phone in 12-18 months. Second factor of authentication will be the Aadhaar number. We hope millions of transactions to take place through this mode in the country in days to come," Nilekani said.

Government, NPCI differ over insurance for RuPay cardholders

Differences have emerged between the government and the National Payment Corporation of India (NPCI), the issuer of RuPay debit card that is given free with every bank account opened under the Pradhan Mantri Jan-Dhan Yojana, over the insurance cover on the inactive cards.



NPCI is of the view that any cardholder who has not swiped the debit card even once in 45 days should not be entitled to insurance cover, while the government says that any such condition defeats the purpose of the national mission for financial inclusion.

Officials told ET that NPCI has argued that imposition of this condition will prompt the cardholders to be active users of RuPay, which competes with established players like Visa and Mastercard. It has proposed that if the government wants to ex tend the duration of swipe to 90 days or 180 days, it should be willing to pay a part of premium expenses that are currently borne by NPCI.

Currently, private insurer HDFC Ergo provides personal accident cover up to Rs 1 lakh to the RuPay cardholders, only if the card is swiped within 45 days of the incident.

Originally, NPCI had called for a tender with a clause mandating a swipe within 45 days, but later it issued a fresh tender, seeking bids for insurance cover for various durations. It called for bids that would cover personal accident when the swipe is within 45 days, 90 days and 180 days of the incident. The bid ding, which closed last week, invited tenders for the next fiscal and only one of the durations will be accepted in consultation with the government.

We have conveyed to the government that we will pay premiums, only if there is a swipe once in 45 days. However, if the government desires to extend it to 90 days or 180 days, it should pay the difference in the premium between 45 days and 90 days or 180 days, whichever period it chooses," said AP Hota, MD and CEO of NPCI.

As a late entrant in the card business, NPCI feels that the condition to swipe the card within the stipulated time will help establish it as a prominent player, particularly since big banks already have tie-ups with its rivals Visa and Mastercard.

The company has called for bids for all cardholders, which are estimated at 20 crore. The cover will include death and permanent disability due to accident. The claim has to be intimidated within 90 days of incident and settled within 10 days of receiving all documents.

Govt forms panel to suggest ways on promoting Rupay card transaction

The government has formed a committee which will come out with structures that can be put in place to encourage use of credit or debit cards, Finance Secretary Rajiv Mehrishi said today.

"We have formed a committee to look at what are the best ways to incentivise use of credit or debit cards ... The committee will look at what structures can be put in place to encourage use of credit or debit cards," Mehrishi told reporters here.

Finance Minister Arun Jaitley in his maiden full-year Budget had said the government will announce incentives to encourage card usage by consumers to curb black money flow into the system.

"One way to curb the flow of black money is to discourage transactions in cash. Now that a majority of Indians has or can have, a RuPay debit card, I, therefore, propose to introduce soon several measures that will incentivise credit or debit card transactions, and disincentivise cash transactions," Jaitley had said .

Elaborating further, the Finance Secretary said, "Several things are in considerations, for example incentivising banks ... You know there are transaction costs which government can perhaps share."

"But there are also otherwise, you know what I would say to disincentivise cash transaction, any expenditure by a person in a five star hotel above Rs 5,000 have to be settled using credit card, there can be also decisions like that."

Till January 31, over 11 crore Rupay cards have been used under Pradhan Mantri Jan Dhan Yojana. This will definitely help banks to encourage customers to go digital with their transactions.