Tuesday, February 9, 2016

NPCI aims at financial inclusion: Rupay Card News



Aiming at financial inclusion for all with India's domestic card service RuPay, the National Payments Corporation of India (NPCI) said that as many as 170 million of its 230 million customer base were first-time card users.



"We already have as many as 596 members who are in the RuPay network, including national, international and state cooperative banks. We are now trying to get the district central cooperative banks (DCCB) also in the fold," says A P Hota, managing director and CEO of NPCI.



RuPay also helps curb forex loss. For every transaction involving foreign card providers like Visa, MasterCard, American Express, there is the transaction fee on it going out of the country - an estimated 400 crore annually. "With a domestic card service system, there is a tremendous amount of money that India can retain," says M Balachandran, chairman, NPCI.



Another advantage with using RuPay over international card providers for a consumer is when it comes to the merchant discount rate (MDR) - the rate charged by banks providing debit and credit card services to merchants. So normally a food bill of Rs 2,000 or a saree purchase of Rs 4,000 will result in a Rs 20-Rs 40 deducted as MDR.



"With RuPay, the advantage is that we charge a fixed rate. We charge 60 paise on the acquirer bank and 30 paise on the issuer bank - amounting to 90 paise per transaction. Normally debit card interchange is anywhere between 0.65 to 1%. Credit card interchanges could be 1%-2%. So with RuPay, there is lower costs to merchants, which is passed onto the card holder," says NPCI's Hota.



RuPay also has RuPay Platinum and RuPay international, in partnership with Diners' Club and Discover Financial Services, that aims at catering to a wider audience. NPCI plans to launch RuPay credit cards by June.

RuPay cards gaining currency among the poor


More than half the 20.19 crore people who have opened basic bank accounts under the Prime Minister Jan Dhan Yojana have activated their RuPay cards and are using them regularly.
About 90 million RuPay cards – envisaged as a home-grown debit card for the economically weaker sections – are being used in the interoperable system of ATM network facilitated by the National Financial Switch alone, “which is a significant indicator for transactions in these accounts,” AP Hota, Managing Director and Chief Executive Officer, National Payments Corporation of India (NPCI), told BusinessLine.
So far, 170 million cards have been issued to all eligible accountholders. If one also includes use of RuPay cards in their own bank ATMs, the number of active cards in use will cross 100 million. “The combined number of cards in use could be much higher,” Hota said.
The number of RuPay transactions, too, has been increasing steadily. For example, from 20 lakh transactions a day about two-and-a-half months ago, the number has gone up to about 27 lakh, according to NPCI data. The average transaction value is about ₹2,000.
In the last three months, about three crore new accounts were added across the country.
Government data show that the as on January 13, the total balance in these accounts has crossed ₹30,000 crore.
According to a senior executive of State Bank of India, while banks have almost stopped campaigns for new enrolments, people continue to open accounts voluntarily.
Key impetus

New account enrolments are being spurred by, among other reasons, the increasing awareness about the social security cover that accountholders get.
Under the scheme, the RuPay card comes with an inbuilt accident insurance cover of ₹1 lakh for up to 90 days after the cardholder carries out a successful financial or non-financial transaction at a merchant establishment, an ATM or an e-commerce platform.

RuPay Card is a excellent product, no visibility: Industry


India's domestic card service RuPay is an excellent card with better rates than foreign card payment processors for banks, merchants and end-users, but its lack of visibility make for less traction, say industry experts.



Launched in March 2012, RuPay currently has more than 230 million customers and handles 20% of transactions in the country. The card has a lower debit card interchange rate, compared to international service providers, who roughly charge between 0.65%-1% on every transaction. "That's an estimated 400 crore in transaction fees that's going out of the country - which we could retain if we used a domestic card provider," says A P Hota, managing director and CEO of National Payments Corporation of India (NPCI).



The NPCI has also launched RuPay Platinum and RuPay International, in partnership with Diners' Club and Discover Financial Services, and plans to launch RuPay credit cards by this June. "But do people know about these products. Where is the awareness? Where is the advertising? There needs to be visibility," says S Santhanagopalan, president-finance, TVS Iyengar & Sons Pvt Ltd.



Since processing of transactions happens domestically, usage of RuPay over Visa or Mastercard result in a lower cost of clearing and settlement for each transaction. But this transaction affordability should be driving higher growth and more visibility, says



Currently RuPay is accepted in more than 1.88 lakh ATMs in the National Financial Switch (NFS) network. In tune with the idea of a stronger domestic payment network, the NFS itself is run by the NPCI.





"Having a domestic card makes a lot of sense at every level. I've seen the domestic NETS card used in Singalore and its amazing the kind of reach, convenience and ease of transaction. That way, we are light years behind with RuPay," says Sudhakar G, a chartered accountant with BMR & Associates LLP.

Many people are unaware that RuPay is currently issued in 277 banks in India, including all the public-sector banks like State Bank of India, Indian Overseas Bank and all major private banks like ICICI and HDFC.



"I had to ask my private bank to issue me RuPay, because on their own they don't take the initiative to issue the domestic card. I think they already have a good relationship with the international service providers and don't want to jeopardise that," says N Arunkumar, who is employed at a private bank.



"It is an uphill task. We have now talked with some banks and they have agreed to issue RuPay cards on certain days of the month," says NPCI's Hota.

NPCI has also networked with 5 lakh merchants in India and RuPay can be accessed at more than 8.75 lakh POS (point-of-sale) terminals across the country. POSs being the machines one sees at every sale counter at supermarkets, boutiques, restaurants or bars.



"I've seen travel cards in Singapore and its so efficient. The ease of travel is remarkable. I'd certainly see it as a welcome move if any such thing is available in India," says Sudhakar on the NPCI's move to launch a tap-and-go mass transit card in March in Bangalore.