Friday, June 12, 2015

Banking on the RuPay

The recent Jan Dhan Yojna has given RuPay a big boost as every account-holder is getting the RuPay card.

 

NPCI had brought to life RuPay debit cards in 2012.

It was recently revealed by the National Payment Corporation of India (NPCI), a government agency, that RuPay-branded credit cards would be launched in less than 10 months from now. Lalatendu Mishra and S. Varadharajan have this explainer on RuPay: 

What is RuPay?
RuPay is India’s own card payment scheme. Like all other card payment schemes, notably Visa and MasterCard, it was created to ensure cashless transactions. The scheme was conceived by NPCI, an initiative of the Reserve Bank of India and an umbrella institution for all retail payment systems in the country. 

Why the name RuPay?
RuPay is a play of the words rupee and payment. It was originally called IndiaPay. 

So, you can do with RuPay what you can do with other cards?
Yes, you can use them at ATMs, as well as while shopping both online and offline. 

How does any card system work?
Imagine you are paying for your grocery purchases at a supermarket using your card. When your card is swiped, the seller’s bank submits the transaction through a card payment network (the likes of Visa or RuPay) to the bank that issued your card in the first place. The card payment network forms the middle layer connecting the card issuing bank and the seller’s merchant bank. 

When there are other such systems already, why one more in the form of RuPay?
RBI wants to back a domestic card system with a few goals. One, provide affordable electronic transactions for local banks. Two, promote financial inclusion. The idea of a domestic card is to break the dominance of international majors such as Visa and MasterCard.
The website of NPCI also lists as a benefit the fact that transaction and customer data of RuPay users will stay in India. 

Where are RuPay cards accepted?
They are accepted at more than one million points of sale terminals. Over 20,000 online merchants accept RuPay cards. Internationally, RuPay cards can be used at all Discover & Diner PoS and ATM networks. 

How affordable are RuPay cards for banks?
Banks pay higher transaction fee in case of foreign cards such as Visa and MasterCard. Since the transaction processing of RuPay happens domestically, it leads to lower cost for clearing and settlement of transactions. According to NPCI officials, the cost is around one-third of the fee charged by foreign card brands. 

How much does NPCI charge for use of RuPay?
For use at ATMs, banks are charged 45 paise per transaction and 90 paise per transaction at point-of-sale in merchant establishments or e-commerce platforms, irrespective of the transaction value. Other card systems charge more in case of high value transactions. 

What is RuPay's market share in India?
According to information in the Finance Ministry’s website, around 14 crore RuPay cards have been issued till date. Out of the 50 crore debit cards and two crore credit cards in circulation, this works out to about 27 per cent. And, this number has been achieved in less than three years. Out of the 14 crore cards issued, 55 per cent are active, according to Finance Ministry data. The recent Jan Dhan Yojna has given RuPay a big boost as every account-holder is getting the RuPay card. The direct benefits transfer scheme has also helped in making the RuPay cards active.

‘55% of RuPay cards active under Jan Dhan Yojna’

 AP HOTA, MD and CEO of NPCI

Exploring the feasibility of networking with China, says NPCI chief

As India’s own card-payment scheme RuPay aims to go global, National Payments Corporation of India (NPCI), which conceived and launched the scheme, has tied up with Chinese and Japanese companies to help citizens of these countries use Indian ATMs and Point-of-Sale terminals. AP Hota, Managing Director and CEO of NPCI, says the corporation plans to take this one-way relationship further and bring more activity into the home-grown card network. Edited excerpts from an interview:

How will the tie-up with China UnionPay International be beneficial?
We are exploring the feasibility of network-to-network relationship with China. Initially, the relationship will be one-way, that is, China’s UnionPay card-holder when they come to India can use Indian PoS terminals and ATMs. Currently, all the ATMs and 99 per cent of PoS terminals are part of NPCI.
Next, we will look at commercial arrangements between NPCI and China Union. They will have their approval and we will now seek approval from our member-banks and we can expect this in the next two months.
Later, the technical integration will be done and, in anticipation, we have already started the process. We may look at going the other way later — that is, our card-holders can use ATMs and PoS terminals in China.

What is the status on cards under Jan Dhan Yojna? How many are active?
Over 130 million cards (13.7 crore according to the Pradhan Mantri Jan Dhan Yojna website) have been dispatched as on April-end. According to Finance Ministry data, 55 per cent of the 140 million cards issued under Jan Dhan are active, though previously it was 70 per cent. However, we are hopeful that once MNREGA is implemented, the level of inactive accounts will come down. Direct Benefits Transfer (DBT) has also helped in making them active.

The RBI has said it will roll out guidelines for issuing mobility cards. When will they be launched?
We are working with the Ministry of Transport to make payments easier in smart cities by issuing mobility cards. We have built the specifications based on both national and international standards.
This will facilitate usage of the cards at grocery shops or while buying tickets for any mode of transport through the contact-less system.
Also, the requirement of contact-less transactions will be huge and procuring large terminals in accordance with Indian standards will also serve the ‘Make in India’ campaign. We have made several presentations and the Ministry is examining our specifications. 

Will you be using the same debit cards?
Yes, it will have to be EMV (Europay, MasterCard, and Visa) enabled and have NFC (near field communication) technology. From September onwards, we will have to issue EMV-based cards as per RBI mandate.
It will be a challenge to replace the existing Jan Dhan Yojna cards into EMV-enabled ones. As of now, the RBI has not given any deadline on the replacement.

Jan Dhan rolls on, but ‘dhan’ in accounts slow to accrue




About 47 per cent of bank accounts opened under the Pradhan Mantri Jan-Dhan Yojana in Karnataka have zero balance

Banks in Karnataka have gone about creating no-frills accounts under the Pradhan Mantri Jan-Dhan Yojana (PMJDY) with great zeal and created close to 72 lakh accounts since August 15, 2014. The difficult task, however, has been ensuring transactions through the accounts, with nearly half of them categorised as ‘zero-balance’ accounts as of now.
Massive drive

Statistics accessed through SyndicateBank, Karnataka’s nodal bank for the scheme, shows that banks in Karnataka created 71.68 lakh accounts under the PMJDY between August 15, 2014 and May 23, 2015. Of them, 33.88 lakh are zero-balance accounts, which translates to 47.27 per cent.
K. Preetam Lal, General Manager of SyndicateBank, said population in the State yet to have bank account was “less than one per cent”, which includes migrant workers and people in very remote areas. He said the banks had not insisted on opening with a balance in the first phase, but the next target was making them operational, which they hope to achieve by the year-end.
A micro reading of the zero-balance accounts across districts under this much-talked-about financial inclusion mission throws up some interesting patterns. Predictably, many districts with over 50 per cent zero-balance accounts lie in north Karnataka, with Bagalkot (61.19 per cent), Haveri (60.64 per cent), Koppal (57.95 per cent), Vijayapura (56.64 per cent) and Ballari (56.42 per cent) among the toppers.
The contrast

However, it is Bengaluru Rural district that has the maximum number of zero-balance accounts (81.15 per cent). In contrast, Bengaluru Urban district has the least number of zero-balance accounts, at 29.87 per cent.
OD, but only with Aadhaar
People opening the PMJDY account are entitled to overdraft (OD) facility, but conditions apply. The account-holder should have “satisfactory” transaction for six months and he/she should be the head of the family. Another important condition is that he/she should mandatorily have an Aadhaar card, which is important for “reasons of regulation”. As of now, of the 71.68 lakh accounts, 41.25 lakh are Aadhaar-seeded accounts.
Reluctance for RuPay card
A PMJDY card holder is entitled to a RuPay debit card, but a substantial number of those who are entitled for the cards do not appear to be interested in taking them. As per the records, though 63.79 lakh debit cards have been issued, banks have reported that about 20 per cent of them have not been collected by beneficiaries.
* Total number of PMJDY accounts in State: 71,68,528
* Total number of accounts with zero balance: 33,88,737
* Total number of Aadhaar-seeded accounts: 41,25,839
* Total balance in accounts: Rs. 641.93 crore
* RuPay debit cards issued: 63,79,177