Showing posts with label ATM. Show all posts
Showing posts with label ATM. Show all posts

Sunday, April 5, 2015

RuPay Card Offers 1% Cashback: What to Know

RuPay Card Offers 1% Cashback: What to Know

The RuPay card, launched by the National Payments Corporation of India (NPCI), is now offering 1 per cent cashback in a direct challenge to international payment card companies like Visa and MasterCard. The cashback facility is available across all RuPay debit cards, which can be used at ATMs, point of sale terminals (PoS), and online transactions.

This implies whatever purchase one makes using the RuPay card, 1 per cent of that purchase amount will be credited back to the account of the cardholder.

Apart from public sector banks, RuPay cards are also issued by regional rural banks, co-operative banks and some private sector banks.

Here are the other benefits of RuPay cards.

1) Lower Cost: Being of Indian origin, RuPay card is cost effective for users as it charges lower processing fees for domestic transactions compared to other cards. "Since the transaction processing will happen domestically, it would lead to lower cost of clearing and settlement for each transaction," NCPI says on its website.

2) Faster Processing: All RuPay card payments are processed within India. This makes RupPay card transactions faster than other international cards.

3) Security: RuPay being a domestically developed card, all transaction and customer data related to this card transaction reside in India. It has also launched an e-commerce solution called PaySecure, which provides a secure platform for e-transactions. The platform offers enhanced security measures in addition to the RBI mandated 2-factor authentication requirement like registration, one-time password (OTP), image-based authentication and anti-phising measures.

Like other international debit cards, RuPay cards also use EVM (Europay, Master, and Visa) chip, a global standard for credit card and debit card payments based on chip card technology. In an EVM card each transaction at point of sales is authenticated through entry of a personal identification number to verify the genuineness of cardholder.

EVM-based cards have more security features than magnetic-strip cards where typically only the card's number and expiry date is processed. EVM cards contain more information which needs to be verified at a point-of-sales transaction, making transactions more secure.

Monday, February 2, 2015

Gramin Bank introduces Rupay cards for minors

M.G. Bhat, Chairman of PKG Bank (centre) along with his colleagues, displaying the Junior ATM Rupay Debit Card to be distributed among school going children having bank accounts.
Pragathi Krishna Gramin Bank, headquartered in Ballari, with jurisdiction over 11 districts, will be the first Regional Rural Bank (RRB) and one among a few commercial banks in the country to launch a new initiative of introducing banking to schoolchildren

M.G. Bhat, Chairman of the Bank, told presspersons here on Wednesday that as part of the initiative, the bank will distribute Junior ATM Rupay Debit Cards to schoolchildren above 10 years of age, introducing them to banking and helping inculcate the habit of saving money. 

A child can open a savings bank account in any of the 632 branches in the 11 districts by submitting a filled-in application form with passport size photograph, along with a declaration-cum-no objection certificate from the guardian to open the savings bank account and issue of Junior ATM Rupay Debit card, a certificate from school authorities and ‘know your client’ documents of the guardian. The account can be opened with zero balance and the account holder gets a passbook and Junior ATM Rupay Debit Card. With the child attaining 18 years of age, the account gets converted into a normal account after a few simple formalities, he said. 

In turn, the child could use the card to draw cash upto Rs. 5,000 a day from any of the ATMs and also make payments upto Rs. 2,000 at point of sale. Guardians would receive SMS alerts to their registered cell phones to enable them to know about the cash withdrawals and transactions of their child. Guardians could remit funds to their children’s account through NEFT/RTGS/mobile banking anytime. 

He said that 35,000 cards would be distributed to as many children simultaneously in bank branches from Thursday. 

G.R. Chintala, Chief General Manager, Regional Office of National Bank for Agriculture and Rural Development (NABARD) Bengaluru, will be launching the scheme in Ballari at St. Philomena High School. 

S. S. Bhat, Chief General Manager, Canara Bank, Bengaluru, will preside. Pushpinder Singh from National Payments Corporation of India, Mumbai, will be among other chief guests.

Monday, December 29, 2014

RuPay debit cards could be the Jan Dhan Yojana’s undoing

The lack of formal banking and cash is one of the toughest constraints in the rural areas of India. The Jan Dhan Yojana might be the best strategy to overcome this. But this ambitious scheme has one critical flaw that could ruin it and result in its failure to deliver on promises: the RuPay debit card. To ensure the success of the yojana, it is essential that the RuPay debit card plan be shelved, because it poses a huge reputation risk — the failure of the card could have damaging consequences for the scheme as a whole.

For families which have been offered bank accounts under the scheme, the advantages of a cash-based economy are just a step away. Except in the case of the lowest deciles, poor families do have some assets but, in the absence of a ready market for them, they are forced to make distress sales for even routine transactions. Having cash in the bank and, more importantly, a way to easily deposit and withdraw money, will be a force-changer for these families once the banking habit spreads.

The weakness in the system comes from the introduction of the debit card. It introduces the risk of a third party meddling with the savings bank deposits of crores of first-time account users. Earlier government programmes have become non-starters for similar reasons. But before going into this in detail, just imagine the landscape the debit card would create for new bank account holders. Recollect the tense times we went through when we first got cards — debit or credit. Recollect those tentative moments eons ago, when we operated an ATM machine for the first time.

In lakhs of villages across India, instead of offering frugal banking, we are trying to replicate these experiences. The debit card has to be preserved, kept reasonably dust free and intact for its magnetic strip to operate. Though the account won’t be frozen if the card is not used, the accident insurance cover gets cancelled if it is inactive for 45 days.

But this isn’t the chief obstacle. Repeated observations of auditors and independent studies about previous government schemes throw up two concerns. First, there is always one stage or point at which the beneficiary has to approach the district administration or the bank to get into the scheme. This is the point at which money could leak out of the scheme. The second concern is complication. The RBI list of frequently asked questions on the Jan Dhan Yojana, sent to all banks, acknowledges this — the “branch manager will have to advise all the related risks to the illiterate account-holder at the time of issuance of RuPay card”. The RuPay debit card is in line to be the leakage point from the scheme. It has the weakness of being complex and requiring a third party to administer.

The results could be devastating. Remember, for instance, in the Integrated Rural Development Programme, the loan scheme had two components: a subsidy provided by the government and a loan given by the bank. People may recall the standing instructions issued by bank headquarters to hand over the subsidy to the district or zila parishad representative but not to disburse the loan. The recipient got some money, the officials took a cut, and there was no pressure to repay a loan.

The Jan Dhan overdraft could meet the same fate, of being parcelled out, with the account holder getting the smallest share. To reduce the hassle and risk of keeping the card with themselves, a sizeable percentage of people, typically the weakest, might give it to someone else for safekeeping — a village leader or the bank manager. This is a real risk. The account holder knows if she does not put more money in the bank, she is safe from further loss, so, she will keep her account dry. Yet the safekeepers could purloin the account holder’s share of government subsidy.

The RuPay debit card’s problem is that it is a physical object and, like any government property, lends itself to widespread misuse. A far better option would have been a frugal banking plan based solely on a single-number platform like Aadhaar, with biometric identification, or a telecom number-based identification platform like M-Pesa for the Jan Dhan account holders to remember and use. Every benefit could have been credited to this account.

The debit card adds nothing to the experience of operating a bank account for the new entrant but has all the elements necessary to wreck it.

Sunday, December 7, 2014

Finance Ministry asks banks for early issuance of RuPay card under Pradhan Mantri Jan Dhan Yojana

The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana (PYMJDY).

The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana.

"Banks were asked for early issuance of pass books and RuPay Debit Cards to customers and organise one month as 'RuPay card activation Month' to increase activation of RuPay card," an official statement said.

In a review meeting of PMJDY held recently, all the banks have been advised to cover the gap including of their Regional Rural Banksby December 15.

As per status presented in the meeting, banks have opened 8.39 crore accounts under PMJDY and have issued 5.32 crore RuPay cards leaving a gap of 3.07 crore.

It was discussed that Aadhaar numbers have been seeded in 30 per cent of account opened under PMJDY, it said.

Banks were asked to aware the customers for Aadhaar seeding and to use various channels including SMS, internet Banking and ATMs for seeding of Aadhaar numbers, it added.

The meeting chaired by Anurag Jain, Joint Secretary (FI), Department of Financial Services, Ministry of Finance banks were asked to make efforts in area of financial literacy in coordination with various agencies and existing Financial Literacy Centers to spread awareness on PMJDY and use of RuPay cards etc.

Executive directors of the banks who participated in the meeting were also asked to arrange for sensitising of their staff members and training for Bank Mitras among others.

During the review, special focus was given on completion of household survey work and coverage of all uncovered households. It was informed that 97 per cent survey work has been completed.

It is found that out of 20.28 crore households, 17.28 crore households have been covered including persons already having bank accounts.
 It was decided that strategy should be framed in such a manner so as to cover remaining uncovered 3 crore households by December 26.

Thereafter the same should be duly publicised through local media that all uncovered households as per survey have been covered and public feedback should be obtained for information about uncovered households, if any, it said.

"For this purpose, information may be given by a person who doesn't have bank account himself or anybody having this knowledge by contacting toll free numbers," it said.

"This process should be carried-out in close supervision and coordination of local district administration. Complete saturation of uncovered Households should be achieved by January 26, 2015," it added.

The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana (PYMJDY).

"Banks were asked for early issuance of pass books and RuPay Debit Cards to customers and organise one month as 'RuPay card activation Month' to increase activation of RuPay card," an official statement said.

In a review meeting of PMJDY held recently, all the banks have been advised to cover the gap including of their Regional Rural Banks ..

Read more at:
The Finance Ministry has asked banks to expedite issuance of RuPay debit card under Pradhan Mantri Jan Dhan Yojana (PYMJDY).

"Banks were asked for early issuance of pass books and RuPay Debit Cards to customers and organise one month as 'RuPay card activation Month' to increase activation of RuPay card," an official statement said.

In a review meeting of PMJDY held recently, all the banks have been advised to cover the gap including of their Regional Rural Banks ..

A multi-wallet solution to aid NSDC’s mission

A multi-wallet solution to aid NSDC’s mission

Ever since its launch in 2010, the National Skill Development Corporation (NSDC), a not-for-profit public-private partnership, has been trying to re-skill young people with the help of training partners from key industrial sectors such as retail, manufacturing and automobiles in order to make them more employable. It successfully trained 1 million youths aged between 16 and 25 years last year and aims to take the number up to 3.3 million by the end of 2014. In return for training the youths, the training partners take a nominal fee—paid for by trainees from a reward amount they earn from NSDC for completing the training under the Standard Training Assessment & Reward (STAR) scheme, in partnership with the Bank of India. However, problems arose when training partners complained they had not received payments on time—and sometimes not at all. With the incentive to train drying up, NSDC had to quickly find a solution. The solution came in the form of a multi-wallet prepaid payment solution—India’s first— run by TranServ Pvt Ltd, a three-year-old electronic prepaid payments company in association with the Bank of India. This not only ensured that NSDC’s training partners got paid on time, but also helped the youths take charge of their own finances. The multi-wallet solution for NSDC was launched by TransServ’s chief operating officer Aditya Gupta and his team: co-founders Anish Williams who is also chief executive officer; Sandeep Ghule, chief marketing officer; Amar Habibullah, business head for Lucknow region; and Anand Kapadia who heads sales and distribution. The platform, which falls under the firm’s Shmart! flagship brand, was developed in-house by TranServ and was already being used by corporate clients. It was customized within 15-20 days for NSDC and launched on 5 February by then finance minister P. Chidambaram.

Read more at:
 Ever since its launch in 2010, the National Skill Development Corporation (NSDC), a not-for-profit public-private partnership, has been trying to re-skill young people with the help of training partners from key industrial sectors such as retail, manufacturing and automobiles in order to make them more employable. It successfully trained 1 million youths aged between 16 and 25 years last year and aims to take the number up to 3.3 million by the end of 2014. In return for training the youths, the training partners take a nominal fee—paid for by trainees from a reward amount they earn from NSDC for completing the training under the Standard Training Assessment & Reward (STAR) scheme, in partnership with the Bank of India.

However, problems arose when training partners complained they had not received payments on time—and sometimes not at all. With the incentive to train drying up, NSDC had to quickly find a solution. The solution came in the form of a multi-wallet prepaid payment solution—India’s first— run by TranServ Pvt Ltd, a three-year-old electronic prepaid payments company in association with the Bank of India. This not only ensured that NSDC’s training partners got paid on time, but also helped the youths take charge of their own finances.

The multi-wallet solution for NSDC was launched by TransServ’s chief operating officer Aditya Gupta and his team: co-founders Anish Williams who is also chief executive officer; Sandeep Ghule, chief marketing officer; Amar Habibullah, business head for Lucknow region; and Anand Kapadia who heads sales and distribution.

The platform, which falls under the firm’s Shmart! flagship brand, was developed in-house by TranServ and was already being used by corporate clients. It was customized within 15-20 days for NSDC and launched on 5 February by then finance minister P. Chidambaram.

Under the multi-wallet solution, TranServ opens two wallets for trainees: one for payment to the training partners, which is not accessible to the trainee, and the other a general savings wallet. The fee for the training partners is automatically deducted from the token sum that the youths are paid every month.

The second wallet is linked to the Bank of India account, and gives the trainee a debit card which can be used at ATMs and points of sale, and also allows them account holder privileges so they can check the balance on phone, enquire about the last few transactions, report loss of card, ask for a statement or new ATM PIN, etc. Alternatively, card holders can check the balance from usage alerts that are sent to their mobile phones after each transaction. The card is issued for two years with the option to have it renewed. Bank of India pays TranServ a fee for this service.

Since March, when the multi-wallet solution was implemented, five lakh students have been enrolled for this solution by NSDC across 26 states. Further, 6,500 business correspondents have been facilitating this programme, with 3,000 applications received per day, making it the largest multi-wallet project in the country. Through this solution, TranServ has helped its 300 training partners recover Rs.200 crore from the total amount of Rs.400 crore due to them, which they are expected to receive by year-end. To ensure security and compliance with the process, TranServ’s multi-wallet solution has been reviewed by four banks: Bank of India, Kotak Mahindra, Ratnakar Bank Ltd and Axis Bank. Besides Bank of India, VISA is also TranServ’s partner for the solution. The so-called ‘benefit disbursement programme’ was chosen as a finalist in Emerging Payments Awards, UK, under the category of the best global government prepaid programme.

The award was created in 2008 to recognize significant and commercial achievements in the prepaid sector. TranServ was also awarded the Aadhaar Governance Award instituted by the Unique Identification Authority of India (UIDAI) in 2012 for its work in large scale financial inclusion and direct benefits transfer (DBT) programmes, enabling real-time transactions through VISA and RuPay, which could also be authenticated by Aadhaar. According to a Reserve Bank of India report in April, only 10-15% of the 369 million debit and credit cards in the company are used for online transactions.

TranServ’s Aditya Gupta believes such multi-wallet solutions could help greatly in increasing the awareness and ease of use of online transactions. Besides, this solution also helps in the government’s plans for financial inclusion by empowering millions of youths to take charge of their own finances, with their own bank accounts, said Gupta.

NSDC hopes to re-skill 500 million youths by 2022. Gupta feels confident that TranServ, with the help of its multi-wallet solution, will be a key finance enabler towards this end, as it prepares for the second phase of the NSDC re-skilling programme due to start shortly.

Sunday, October 26, 2014

Amazon shopping, Jet Airways booking now easy via RuPay Card

NPCI has already issued more than 30 million RuPay cards.
After Flipkart, home-grown payments gateway RuPay has tied up with Amazon and one of the largest carriers Jet Airways.

With this, the RuPay debit card holders can now shop best deals on Amazon and book air tickets on Jet Airways, the Reserve Bank-promoted National Payment Corporation which issues the RuPay cards said in a statement today.

"Acceptance on Amazon is a breakthrough for us. We are glad to offer a wider horizon to our cardholders to transact online. Also, our integration with Jet Airways will definitely benefit our cardholders,," says NPCI managing director AP Hota said.

Commenting on the tie-up, Amazon India general manager for payments Srinivas Rao said, the arrangement is in line with its strategy of offering the widest set of customers a variety of payment options that will enhance their shopping experience.

The NPCI had last week announced that it has tied up with Flipkart, Snapdeal and LIC who are among over 15,000 merchants who will be accepting the RuPay cards, which are the homegrown alternative to foreign gateways like Visa and MasterCard.

Following the tie-up Jet Airways has begun accepting RuPay cards on their site for air-ticketing, airlines’ senior vice-president Gaurang Shetty said.

NPCI has already issued more than 30 million RuPay cards, which are accepted at all ATMs, and by 9.8 lakhs POS terminals and over 15000 online merchants.

The domestic online retail industry, as per a Crisil report, is expected to touch Rs 50,400 crore by FY16 from Rs 1,500 crore in FY08.

According to online industry body IAMAI, travel has emerged out as the most transacted segment in the online space accounting for 60 percent of online payments. The value of online payments for travel industry stood at Rs 50,000 crore in FY13.

Monday, September 22, 2014

Financial Inclusion in India: Moving Beyond Bank Accounts

On August 15, India’s Independence Day, Prime Minister Narendra Modi announced a national mission of financial inclusion. Called the Pradhan Mantri’s Jan-Dhan Yojana — the Prime Minister’s People’s Wealth Program — it envisions bank accounts for all Indians. In its first phase, ending August 14, 2015, the target is 75 million accounts. “I wish to connect the poorest citizens of the country with the facility of bank accounts,” said Modi. “There are millions of families who have mobile phones, but no bank accounts. We have to change this. The change will commence from this point.”

Earlier prime ministers had made similar grandiose announcements, with few results. Indira Gandhi started a campaign against poverty, but it never gained traction. Manmohan Singh started a campaign against unemployment, but that failed to take hold as well. The Modi government is still in its honeymoon period; people are willing to accept Jan-Dhan as a plan but not a reachable destination.
On August 28, Modi formally launched the program. Banks across the country had been working overtime to make the necessary arrangements. On the first day, more than 15 million accounts were added. “It is the end of financial untouchability,” Modi noted. “It is the beginning of freedom from poverty.”

It’s not just the accounts that enticed people to the camps set up by the public sector banks. Every account holder will get a RuPay debit card, launched by the Reserve Bank of India (RBI)-promoted National Payments Corporation of India (NPCI); accident insurance cover of Rs.100,000 (approximately $1,650); life insurance coverage of Rs. 30,000 for those opening accounts before January 26 (celebrated as Republic Day in India), and an overdraft facility of Rs. 5,000.
“Never before in economic history have 15 million bank accounts been opened in a single day,” said Modi. “Never before have insurance companies issued 15 million accident policies in a single day. Never before has the government of India organized a program of such scale — over 77,000 locations — with the participation of so many chief ministers, union ministers, and government and bank officials.”

ICICI, India’s largest private sector bank, opened only 100,000 accounts that day. “ICICI Bank has been working on a comprehensive financial inclusion plan over the past four years,” MD and CEO Chanda Kochhar told Knowledge@Wharton. “Through our network, we cover approximately 15,600 villages and have brought more than 18.5 million unbanked people into the banking fold. We aim to open 2.5 million accounts under the yojana, taking the total number of accounts under our financial inclusion program to more than 20 million.” As of September 8, major private sector banks taken together opened just 580,000 accounts.

Reasons for Concern
It remains to be seen whether the program will lead to big changes. “This is a small step and the take-up is encouraging,” says Wharton finance professor Krishna Ramaswamy. “It might lead to small and improved savings in an accountable and hopefully trustworthy way.”
The skepticism comes in part due to questions about the veracity of the numbers themselves. RBI governor Raghuram Rajan has publicly warned the banks not to run after records. “We have to make sure the Jan-Dhan Yojana does not go off track,” he said at a conference on September 15. “The target is universality, not just speed and numbers.”

According to H.K. Pradhan, professor of finance and economics at XLRI Jamshedpur, there are concerns of duplicate accounts from people who may have opened them “without really understanding what they were doing.” He adds that the issue will be sorted out when biometric identification is introduced. But there could be operational complications: Anybody in India can open multiple accounts, so how can there be a different rule for the currently unbanked?

The second — and more important — issue is that India’s problem of financial inclusion is gargantuan. According to World Bank data, only 35% of Indians have an account with a formal financial institution. This is 42% in the case of men and 27% for women. Only 8% have debit cards and 2% credit cards. According to the government’s 2011 Census, 58.7% households utilize formal banking services.

Rating agency Crisil, a Standard & Poor’s company, has a financial inclusion index called the Inclusix. The all-India Inclusix score is 40.1 (which mean that about 40% of the country has access to formal banking services). There are wide variations — from 62.2% in the southern region to 28.6% in the eastern region.

The high-powered Nachiket Mor committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, set up by the RBI, found that 60% of the rural and urban population did not have a functional bank account. “India’s financial inclusion indicators, particularly in banking, put it below the median of countries, and bank accounts are a first step to inclusion,” says Rajesh Chakrabarti, executive director of the Bharti Institute of Public Policy at the Indian School of Business.

According to a report by global consulting firm Frost & Sullivan, India’s continued growth can only be assured “if steps are taken to ensure that social and economic development is inclusive.” Financial inclusion has moved into public consciousness only over the past decade or so. “Financial inclusion can no longer be treated as a fringe subject,” notes Jayanta Nath Mukhopadhyaya, director of the J.D. Birla Institute (department of management). “It has to be recognized as an important part of the mainstream thinking on economic development.”

The immediate challenge for banks, Pradhan says, will be acquiring the technology needed to facilitate more financial inclusion. “Moreover banks need to convert the old and dormant accounts into the new financial inclusion accounts in order to get the accident coverage and overdraft facility for the account holders.” This means that some of the work done on financial inclusion so far will have to be duplicated.

“There is much more to financial inclusion” than simply opening accounts, says M.S. Sriram, visiting faculty at the Centre for Public Policy at the Indian Institute of Management in Bangalore. “The state needs to put its resources to ensure that the infrastructure backbone is available — which means that there is ubiquitous presence of interoperable point of sale devices that allow people to transact without a hefty fee…. Once this architecture is available, the poor will start transacting.”
Chakrabarti adds that the government “seems to be fighting the symptoms rather than the disease. The point is for the formal banking system to be present when needed and be superior in convenience and efficiency. However, the approach taken seems to be to lure people into banking through incentives and to hope that the habit sets in. The trouble is that once the sweetener goes away, day-to-day banking provides little benefit in convenience to many users at the bottom of the pyramid.”

Long Road Ahead
The consensus of opinion is that Jan-Dhan is a worthwhile effort, but it’s too early to say whether it will succeed. “As compared to its predecessor — the Swabhiman scheme — this program has a high possibility of success due to two major strategic improvements,” states Rana Kapoor, MD & CEO of YES Bank and president of apex chamber Assocham. “First, it mandates provision of ATM-cum-debit cards to each account holder instead of the Smartcard [for thumbprint authentication] as earlier, where the customer was solely dependent upon agents or business correspondents. ATM debit cards give 24-7 access to savings, which is critical for the below-the-poverty-line population. The quantum of savings is limited and probability of emergency requirements is high.”

Friday, September 12, 2014

Card payment network RuPay sees boost from government banking scheme

A government drive to expand banking services in India is giving a boost to home-grown card payment network RuPay, which expects to quadruple the number of users by March and make debit cards more acceptable in a nation where cash is still king.

Started in 2012 by a company owned by 10 local and foreign banks, RuPay competes with global payment firms Visa Inc and MasterCard Inc for the few customers in Asia's third largest economy able to afford a debit or credit card.

As of July, banks issued just under 435 million payment cards in India, a nation of 1.3 billion people. Most were debit cards.

RuPay's share of daily card transactions, however, remains small compared with the global firms, which are more established, offer both debit and credit cards and are accepted by more retailers. RuPay currently offers only debit cards.

RuPay users account for just 1.5 percent of daily card transactions of almost one million at retailers, said A.P. Hota, chief executive of the National Payments Corp of India (NPCI), which runs RuPay.

Hota told Reuters the payments network was set to grow rapidly from the government's so-called financial inclusion scheme, which aims to ensure the majority of households has a bank account within months.

Under the scheme launched late in August, Indians who open a bank account for the first time automatically get a RuPay card.

Hota said the number of RuPay users has now almost doubled  from 23 million at the end of July.

By March next year, he expects that number to rise to 160 million, with more than 60 percent of the increase coming from the government scheme.

"Jan Dhan itself would provide a big opportunity for the domestic card brand to be a formidable force," said Hota, referring to the financial inclusion scheme, Jan Dhan Yojana, which means People's Wealth Scheme.

"(RuPay Card transactions are) just a drop in the ocean at the moment. But drop by drop we are increasing our size."

NPCI is also trying to lure more customers by charging banks lower fees than Visa and MasterCard, Hota added.

Visa, the world's largest credit and debit card company, declined to give its India market share, but said the country was amongst the world's fastest-growing payments markets.

"We believe Visa is well-positioned competitively," Uttam Nayak, group country manager of India and South Asia, at Visa, said in emailed comments, adding his company welcomed competition.

MasterCard did not reply to Reuters' requests seeking comment.

NPCI's shareholders include India's biggest bank, the State Bank of IndiaBSE 0.93 %, and foreign lenders Citibank and HSBC. The central bank has a nominee on its board.

The organisation plans to launch RuPay cards that will be accepted overseas through a partnership with Discover Financial Services, Hota said, and is also in talks with Japanese card network JCB about a partnership.

RuPay had aimed to issue credit cards by March 2015, but those plans have now been delayed by the government scheme, Hota said. "Rural acceptance of the Jan Dhan cards will be our priority," he added.

Wednesday, September 10, 2014

Improving capacity is key to financial empowerment

A lot has already been said about the Jan Dhan Yojana; by the eloquent prime minister himself and then by advertisers, commentators and other worthies.In the crowd of messages, one called for urgent action. It said, 'Free accidental death insurance of up to Rs 10 lakh on your debit card has expired. Shop NOW to activate cover for the month.' I have no intention of dying to find out how much free insurance I am worth.

However, with the Jan Dhan Yojana fresh on my mind, I pulled out the plastic at the gas station, only to put it back because the two factor authentication required that I step out in the rain to punch my PIN at the handheld device, now irrefutably attached to the cashier's table!

I guess I am now without cover and I wish the new millions getting free insurance with their new debit cards better luck than that.

A lot has already been said about the Jan Dhan Yojana; by the eloquent prime minister himself and then by advertisers, commentators and other worthies. It is phenomenal as far as communication and intent goes. It warms the heart to know that the bullet trains will not bypass the small hapless woman, but that there is a plan to empower her in plastic and reward points.

It is difficult to argue with the potential of financial inclusion to significantly change lives and create long term, sustainable value. And yet, it will be a while before we know if the Yojana triggered or delayed financial inclusion.

Banks successfully opened 1.5 crore accounts on the launch day. However, achievement of numeric targets will not indicate success here as the entire value of the banking relationship is from ongoing use of the accounts. One hopes that low hanging fruits such as benefits transfers will be implemented efficiently by the government and banks will be able to manage BCs who in turn will be able to fulfill customer expectations.

But given the different agencies involved, it will be interesting to see who takes long term responsibility for actions, inactions and decisions made for and on behalf of banks, including potential credit and cost decision made for and on behalf of banks, including potential credit and cost decisions.

On their part, the central bank has been working at a furious pace to change the bank licensing framework to accommodate needs of an economy marked by small value, high frequency transactions.

The idea is that if supply side constraints are removed, old and new banks will compete and collaborate and test new, innovative, technology-driven distribution frameworks that will meet the demand side at a frameworks that will meet the demand side at a fair price, correcting a historical skew.
In the crowd of messages, one called for urgent action. It said, 'Free accidental death insurance of up to Rs 10 lakh on your debit card has expired. Shop NOW to activate cover for the month.' I have no intention of dying to find out how much free insurance I am worth.

However, with the Jan Dhan Yojana fresh on my mind, I pulled out the plastic at the gas station, only to put it back because the two factor authentication required that I step out in the rain to punch my PIN at the handh ..

Wednesday, September 3, 2014

Outlets everywhere, not many to bank on

 Is the existing banking infrastructure ready to take on the Jan Dhan Yojana load?
One of Rajesh Singh's friends went from Delhi to Birpur, a small town in Bihar's Supaul district bordering Nepal, with few hundred rupees and an ICICI bank debit card in his pocket to attend a family function. Being accustomed to the reliability of automated teller machines (ATMs) to dispense cash at any hour, he never worried about the expenses he was to incur at the function the next day. However, upon arrival at the small town, he got the shock of his life when he was told that all the three ATMs in the town were out of order and were going to remain so for the next few days.

"My friend had to ask his acquaintances to lend him Rs 25,000. I could sense that he was not comfortable, more so because he was not in a position to pay the money back quickly," said Birpur resident Rajesh, recalling the events of the evening he spent with his friend running around to arrange the money which could easily have been withdrawn from any of the ATMs. "My experience is that all the ATMs in and around Birpur rarely work," Rajesh added. And in places where they do work, cash runs out within minutes. "ATMs are stuffed with cash once a day, sometime around 10 am. And there is a long queue outside to withdraw money. Within 30-40 minutes ATMs run dry," said Avinash, a resident of Triveniganj, another small town in Bihar, 40 km from Birpur.

The problem is set to grow following issuance of 75 million new RuPay cards in the next six months with the launch of the Jan Dhan Yojana. In addition to the problem of long queues at ATMs, there would be the problem of guiding new cardholders, especially in rural and semi-urban areas, on how to use those cards, some bankers told Business Standard. "Biometric cards, though costly in the beginning, are very simple to use. And they mitigate the risk of theft or fraud. RuPay cards will entail a lot of guiding from banking staff to new customers. That may result in hiring caretakers at ATMs who will help customers. Then there is the risk of pin-based cards being misused," said a middle-level banker with a leading public sector bank.

Biometric cards prevent duplication, which is not the case with the RuPay card at the moment. "There is competition among branches to open accounts. With the Reserve Bank of India mandating that a single proof of identity is enough to open an account, people with multiple identity cards are opening multiple accounts. And all new accounts are being opened under the Jan Dhan scheme, irrespective of income category of the people opening them," said a banker with a public sector bank working in Delhi. People opening accounts were expecting higher insurance cover and overdraft with multiple accounts, observed another public sector banker based in Sagar, Madhya Pradesh.

According to Reserve Bank of India data, the country had 17,844 ATMs in rural areas and 19,327 ATMs in semi-urban areas at the end of March 2013. Most of these areas are served by state-run banks. And many of them face disruptions due to failure in satellite linkages and poor broadband connectivity. Bankers in charge of running the ATM network say that while in urban centres, faulty machines can be rectified in eight hours, the resolution takes seven to eight working days in remote locations.

On ATMs running out of cash, officials say banks earmark an amount for a region, which is revised only during the festival season. The amount has remained the same despite the number of customers and the size of the ATM network growing, they add. The country had a network of 95,686 ATMs at the end of March 2012. The number increased to 160,055 by March 2014.

A creaky ATM network is not the only problem in towns and villages. The sense one gets after talking to bankers and customers in states like Bihar, Uttar Pradesh and Madhya Pradesh is that the branch network, especially of state-run banks, too needs a major infrastructure lift. "Our branch is running without an electricity connection for a year now. There is a limit to how much service we can offer without basic facilities like regular power supply," said a branch manager with a leading public sector bank posted at a place 100 km from Bhopal.

As a result, customers end up spending a lot of time on services like withdrawing or depositing money. "I operate a current account in the main branch of Punjab National Bank in Hapur. There is such a rush that I spend a minimum of two hours to withdraw or deposit money," said Ajay Tyagi of Hapur in Uttar Pradesh. Then there is the problem of frequent disruption in broadband connection stalling transaction in branches for hours. "My uncle had to sell a piece of land and execute a sale deed in the registrar's office. He was in a real hurry as he does not stay here but needed money urgently. Before executing a sale deed you need to deposit money for stamp duty and other charges in an authorised bank and get the receipt. My uncle nearly missed executing the sale deed as the banking operation was disrupted that day because of a link failure," said Shekhar Chaudhary, a resident of Ganpatganj, a small town in Bihar's Supaul district. And link failure is a recurrent problem in many branches in small towns and villages.

While the bank network expanded by 18,346 in financial years 2011, 2012 and 2013, the country saw an addition of 108 million basic savings accounts in that same period. "The growth can be easily managed if alternative channels of banking work efficiently. However, because of poor financial literacy and consequent apprehension about alternative channels, many people like to visit branches for basic transactions," said the middle-level banker.

  • Poor satellite linkages and broadband connectivity for automated teller machines
  • Uninterrupted power supply mostly unavailable to run the machines
  • ATMs in rural and semi-urban areas tend to run out of cash soon
  • Guiding new RuPay card users to use ATMs
  • Higher risk of misuse and frauds due to lack of knowledge about ATM use
  • 7-8 working days to repair faulty machines in remote locations, against 8 hours in urban areas

Friday, August 8, 2014

BMB rolls out RuPay debit card

 Bhartiya Mahila Bank (logo).jpg

Bharatiya Mahila Bank (BMB) has launched BMB RuPay debit card with an EMV chip. The card was launched by Usha Ananthasubramanian, Chairperson and Managing Director, BMB, in the presence of AP Hota, Managing Director and CEO, National Payments Corporation of India (NPCI), in Mumbai. EMV chip technology is becoming a global standard for credit card and debit card payments. It is named after its original developers — Europay, Mastercard and VISA.

Bharatiya Mahila Bank (Hindi: भारतीय महिला बैंक) (BMB) is an Indian financial services banking company based in New Delhi, India.Former Indian Prime Minister Manmohan Singh inaugurated the system on 19 November 2013 on the occasion of the 94th birth anniversary of former

Indian Prime Minister Indira Gandhi. Although initially reported as a bank exclusively for women, the bank allows deposits to flow from everyone, but lending will be predominantly for women. India is the third country in the world to have a bank especially for women, after Pakistan and Tanzania.
The bank has been criticized as adopting a segregational approach to gender equality. Uma Shashikant of the The Hindu writes:

Women-only banks are another instance of wanting to treat women ‘differently’. We guise this in many forms, some in garbs of reverence, some as protection, but they are all forms of discrimination that promote gender-based stereotyping. Women-only organisations stem from this eagerness to patronise women in the name of preferential treatment

Not sharing client data, says NPCI

MUMBAI: National Payments Corporation of India - Reserve Bank of India's brainchild which manages the backbone of the country's payments systems - has been asked to pay a token fine of Rs 10,000 to the Maharashtra treasury for passing on highly sensitive personal data to processing companies without a non-disclosure agreement. NPCI has contested the order by the state government's principal secretary (information technology) denying both charges - of compromising individual personal data and of not having non-disclosure agreements.

The adjudicating officer's order was in an intellectual property rights tussle between two companies that processed card transactions for banks. CredenTek Software, an IT company, had complained against In Solutions Global (ISG), which specialized in processing card transactions for banks. NPCI came into the picture as it emerged that it was one of ISG's major clients.

"We had filed a case against In-Solutions Global for source code violation and as part of our evidence we had submitted CDs containing sensitive personal data of bank customers which was handed to our clients by ISG," said Prashant Mali, Cyber Law & Cyber Security Expert from Mumbai who represented CredenTek for this case.

Hearing both sides, the adjudicating officer - Rajesh Aggarwal, principal secretary (information technology) - said in his order that no case is made out of data theft or source code stealing under the IT Act and it is a dispute regarding contracted services not being rendered rather than a copyright issue. While he dismissed the source code, he said that during the course of hearings, "a more sinister crime of negligence under the IT Act came to light" and expressed shock that real data of bank customer transactions was passed on as sample data for testing software rather than simulated data.

When contacted, NPCI said it does not share any confidential information with any party and has strong privacy policy based on international standard and its and has been awarded certificate for this. NPCI said its electronic clearing and settlement system was "safe and highly secure". and was compliant with Payment Card Industry Data Security Standards. NPCI said it has entered into a non-disclosure agreement with In-solutions Group, which has been filed with the application before the IT secretary of the Maharashtra government - the plea has not been disposed of so far.

"The order passed by the IT secretary against NPCI was without jurisdiction and ultra vires and beyond the powers. There was no proceeding initiated by the IT secretary, government of Maharashtra, against NPCI under any law. Even no notice was issued by IT Secretary before issuing order for payment of penalty. NPCI has already challenged his order as soon as it came to knowledge of NPCI by filing an application for review application," it said in a statement.

NPCI, which manages the ATM switch, Rupay and other payment networks such as IMPS that allow electronic funds transfers between banks, has been upset at the strong remarks made by the adjudicating officer without being heard. In the order, the adjudicating offer had said what was "more worrisome" was that NPCI is also running the Aadhaar Payment Bridge System, which includes Aadhaar number (UID) of the customers. Now, UID number is perhaps the most sensitive data of an Indian citizen, which needs to be protected even more than the Social Security Number (SSN) of USA, as it has linkage to biometrics (fingerprints and Iris). Obviously, UID number cannot be published on any website by any government department, and should be used for any Analytics or any other purpose, only with proper precautions as per Rules 6 and 7 of Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011."

Friday, August 1, 2014

The NDA’s ambitious financial inclusion plan

Mumbai/New Delhi: Bank accounts for every Indian and banking services within 5km of every town and village, and all by March 2016—that’s the ambitious financial inclusion plan Prime Minister Narendra Modi will likely detail in his Independence Day speech.

The NDA’s ambitious financial inclusion plan

Named Sampoorn Vittiyea Samaveshan (SVS), the scheme has been sketched out in a paper prepared by the department of financial services. Mint has reviewed a copy. In his budget speech, finance minister Arun Jaitley announced the National Democratic Alliance (NDA) government’s intention to launch a financial inclusion mission on 15 August that would provide banking services to all households in the country, and especially focus on women, small and marginal farmers and labourers. According to Census 2011, 59% of the 246.7 million households in India have access to banking services; 54% of the 167.8 million rural households in India have access to banking services, and 67% of the 78.9 million urban ones do. Jaitley will meet chiefs of state-run banks on Thursday to discuss the preparedness of banks to roll out the government’s financial inclusion plan, bankers and a government official said.

“The meeting is mainly to review how banks are gearing up for the rollout of the financial inclusion mission,” said the government official, who did not wish to be identified. The financial inclusion plan will look to provide universal access to banking facilities with a basic bank account with an overdraft facility of Rs.5,000 and a Rupay-enabled debit and ATM card with inbuilt accident insurance cover of Rs.1 lakh. “This account would be linked with the Aadhaar number of the account holder and would become the single point for receipt of all government benefits,” the paper said. Rupay is an Indian government initiative and the country’s own equivalent of Visa and Mastercard. Account holders will also receive financial literacy training sessions and, on completion of these training sessions, a Rs.5,000 overdraft limit.

 According to Reserve Bank of India estimates, 182 million zero balance accounts had been opened in India up to March 2013, but only 3.95 million of these availed overdraft facilities adding up to Rs.155 crore. The approach paper, dated 16 July, outlines six pillars upon which the entire programme will be based. The financially excluded should be provided universal access to banking facilities, the paper said. They should have basic bank accounts and should be provided microcredit, microinsurance and unorganized sector pension facilities, it added. The borrowers under this scheme will undergo financial literacy training, while the entire loan portfolio should be insured against a credit guarantee fund, with an initial corpus of Rs.1,000 crore, which will provide for defaults on such accounts, it said.

To achieve these objectives, the government is open to public-private partnerships while it will also tap into the existing national infrastructure of post offices and the future payments banks network, according to the approach paper. Various microcredit organizations will be allowed to compete with each other while the crucial role will be played by the business correspondents (BCs), or agents of banks who reach out to the last mile, offering simple credit and deposit products to customers. According to S.S. Mundra, chairman and managing director of Bank of Baroda, not all objectives have to be met by 2016 and the entire financial inclusion drive will be done in a phased manner, which should give banks ample time to prepare. “We already have 6,000 business correspondents, and they are doing a very good job. If need be we will hire more such BCs,” Mundra said, adding that banks’ own resources won’t be stretched much because the bank staff will largely play a supervisory role.

“This is not a big task because most of the job has already been done by banks. Accounts are being opened every day and by 2016, we will be covering every household of every village we have been assigned without any problem,” said M. Narendra, chairman of Indian Overseas Bank, which has about 3,500 BCs who are paid Rs.3,500 per month. In order to incentivize BCs, the paper proposes that remuneration for them be set at Rs.5,000. According to Rishi Gupta, chief operating officer and executive director of FINO PayTech, a banking correspondent service provider, the payment of Rs.5,000 is less than what it should be but still a welcome raise. “Government is acknowledging that providing last mile delivery involves a lot of expense and expertise.

 If you don’t incentivize the people who are involved in the last mile delivery, soon they will lose interest and any such financial inclusion plan will not fructify,” Gupta said. Technology will also need to play an important part in the government’s financial inclusion plan. For providing fully enabled bank accounts to the unbanked population, banks will have to ensure that every transaction is part of the core banking solution. Till now, most of these transactions were offline and not connected to the bank’s core banking network.

That could well address the issue of inactive accounts, said a bank official. “Unlike earlier, the bank accounts will be fully operational from anywhere, be it a bank branch, an ATM or a business correspondent outlet,” added this person who did not wish to be identified. “Transfer of money directly to beneficiary accounts under the direct benefit transfer scheme will also make sure that the accounts are active,” the bank official added.

The direct benefits transfer scheme envisages transferring directly to beneficiaries the money they are entitled to under government schemes. Funds will be transferred after a customer’s biometric authentication, either through Aadhaar-enabled payments system or the bank’s own servers. Aadhaar is a unique ID issued by the Unique Identification Authority of India that has thus far issued 650 million cards. To make it lucrative for bankers to open bank accounts and transfer funds from the government to beneficiary accounts, the government is considering paying banks 2% of the transaction amount for every transfer.

The government’s plan could also be a big business opportunity for technology providers. The department of financial services, in an advertisement, has asked interested technology providers to present their innovative ideas to improve the existing last mile connectivity. “The combination of bio-metric, smart cards and low-cost ATMs have not been successful in scaling up. Putting the responsibility on leading banks to adopt a region for financial inclusion hasn’t worked either.

The needle has not moved,” said Rama Vedashree, vice-president at software lobby body Nasscom. “The ministry of finance may be looking for new technology solutions to ensure the outreach of financial inclusion programme as the current technologies being used have not been able to do that.” “This may be an effort to find and understand the scope of new low cost technologies that can fast-track the process of financial inclusion,” she added. Once the mission is launched, its progress will be reviewed quarterly by the finance minister, rural development minister and the minister for communication and information technology. In addition, financial services secretary G. S. Sandhu will review the progress with bankers every month.

Monday, July 28, 2014

Himachal Coop Bank launches RuPay Kisan Credit Debit Card

RuPay Credit Debit Card Launched

Shimla: To enable easy credit and debit facilities for the farming community, Himachal Pradesh State Cooperative Bank (HPSCB) today launched the RuPay Kisan Credit cum Debit card.
Bank authorities claimed that HPSCB had become the first cooperative bank in the country to introduce the service for its largely rural customers.

RuPay Credit Debit Card Launched

Launched by chief minister Virbhadra Singh, on the occasion he said, “HPSCB having kept pace with the changing times in banking services like introducing core banking solutions and now launching of RuPay credit debit card would go a long way in providing efficient services to farmers and other customers.”

Chairman HPSCB Harsh Mahajan informed that the Bank through its more than 207 online branches and extension counters was extending prompt and uninterrupted services, particularly to the farming and horticulturalist communities.

Being one of the first cooperative banks in the country to introduce ATM services, the management plans to open four new branches at Golthai in Bilaspur, Gattadhar in Sirmaur, Rajnagar in Chamba and Mandal in Shimla soon.

Besides licenses for starting nine extension counters at Kudu in Shimla, Nanawan and Kothipura in Bilaspur, Bir Road Ahju and Ropri in Mandi, at Obri and Sarol in Chamba, Kamlanagar and Matiana in Shimla have also been granted by Reserve Bank of India, said Mahajan.

Talking about the RuPay credit-debit card, Amitabh Awasthi, managing director HPSCB said that it would facilitate farmers to use their own money or the money loaned from the bank with ease for undertaking seamless transactions for buying agricultural inputs, such as fertilizers, pesticides or mechanized tools such as spray pumps, when required.

Earlier, Harsh Mahajan presented a cheque of Rs. 21,65,760 as dividend for the year 2012-13 and contributed a Rs 51 lakh cheque towards the Chief Ministers Relief Fund to Virbhadra Singh.

Nabard launches RuPay Kisan cards

National Bank for Agriculture and Rural Development (Nabard) today rolled out RuPay Kisan Card and RuPay Debit Card here today.

National Bank for Agriculture and Rural Development (Nabard) today rolled out RuPay Kisan Card and RuPay Debit Card here today.

"This is the first time that RuPay Card, which is in the nature of ATM cum Debit Card, is being issued by any cooperative bank in the state of Haryana," said Nabard Chief General Manager (Haryana) D V Deshpande.

He said the issue of RuPay cards by cooperative banks will enable them to improve their customer service and bring it on par with any other bank to farmers and other customers.

Meanwhile, Haryana Chief Minister Bhupinder Singh Hooda asked Nabard to increase the refinance given to cooperative banks from 50 per cent to 75 per cent.

Speaking on the occasion of its 33rd Foundation Day here today, Hooda said reducing groundwater level and shrinkage of fertile land posed big challenges which could be met by promoting piped and drip irrigation, constructing green houses, promoting dairy and techniques of vertical farming.
Hooda asked Nabard to work at the micro level for the expansion of these techniques and said it should provide finance for setting up water bodies in the state.

He said while Kisan Clubs have been set up in all sub-divisions of the state, there is a need to set up Kisan Clubs in all villages.

"Nabard should extend a helping hand in doing so. These clubs would act as a bridge between NGOs, self-help groups, farmer groups," he added.

Tuesday, July 22, 2014

Popularising RuPay Card - State Bank of India Initiative

The State Bank of India, the largest public sector bank started issuing RuPay cards  three months back and has realised the benefits of it.

In India, 90 per cent of credit card transactions are domestic; however, the cost of transactions is high due to monopoly of foreign gateways like Visa and Master cards.

If this process of transactions is made India-centric, cost can come down drastically. In the last 3-4 decades, the usage of credit and debit cards -- what we call the plastic money -- has increased manifold.

Their usage has actually multiplied in the past one decade due to emergence of e-commerce. We can not only make purchases of our needs from a big store by swapping our credit or debit card, we can even purchase air, train, bus ticket; or any commodity from e-commerce websites using this plastic money.

Though banking is no new business in India and credit and debit cards have been issued since long ago; however, these credit and debit cards had essentially been issued in partnership with international gateways like Visa and Master card. It is notable that Visa and Master cards make huge bucks from this business.

According to world Line India, a leading agency providing services in the field of electronic transactions, there are nearly 20 million credit cards in the country; and HDFC Bank, State Bank of India, ICICI Bank and Axis Bank are the main banks issuing most of the credit cards. Apart from this, there were 389 million debit cards in the country in March 2014.

During the last one year (2013-14) 58 million new debit cards were issued. It is notable that after the ATM machines were started being used, all banks have been issuing debit cum ATM cards to their customers, which can be used not only for withdrawing money, but also for making transactions at stores and e-commerce websites.

Foreign gateways like Master and Visa cards charge fee in lieu of their services and huge sum of foreign exchange gets transferred abroad by these companies. Due to monopoly of Master and Visa cards, a hefty fee is charged by them.

Their business in India has been increasing leaps and bounds in the last 10 years. According to RBI, credit cards transactions were Rs 1.56 lakh crore and debit cards transactions Rs 20.22 lakh crore during the year 2013-14.

Foreseeing the importance of an Indian Card, Reserve Bank of India, desired to start an Indian card and National Payment Corporation of India (NPCI), realised this desire and an Indian card in the name of RuPay was started on March 26, 2012.

Today in­­­creasingly the transactions of a majority of Indian banks and financial institutions are being facilitated by RuPay and it is giving a  tough competition to Visa and Master card. NPCI has also tied up with Discover Financial to give RuPay an international acceptance.

International acceptance 

RuPay global card is now accepted at ‘Discover Global Payment Network’ internationally. RuPay was dedicated to the nation on May 8, 2014 by the President of India, Pranab Mukherjee.

RuPay card is accepted on all ATM machines under national financial switch of NPCI. According to the NPCI data there are 1,45,270 ATMs and 8,75,00 points of sale which come under RuPay platform. In addition to this RuPay is accepted on nearly 10,000 e-commerce websites.

Banks recognised by NPCI for this purpose can issue RuPay credit and debit cards which are accepted in ATMs, Points of Sale (PoS) and e-commerce websites. As of now about 240 banks have been issuing RuPay cards. Along with this 200 cooperative and rural banks are also issuing RuPay cards, giving a boost to financial inclusion.

Kotak Mahindra Bank has started a new initiative on financial inclusion; whereby farmers of 75 cooperative societies can get payment for their milk directly to their bank account.

This model is destined to be implemented in Gujarat, where 3 lakh farmers of 1,200 societies will benefit.

It is notable for domestic sector that RuPay fee is merely one third of Master and Visa cards. Though RuPay is cost effective private banks are still not cooperating in adopting RuPay.

Around 150 lakh RuPay cards in circulation now have so far been mostly issued by public sector banks. Argument of private banks is that since they have long period tie-ups with Master and Visa Cards, they cannot adopt RuPay till these agreements expire.

Though private Indian and foreign banks know that in the long run RuPay would prove to be beneficial, they are not ready to adopt new card looking at their short term interests.

The State Bank of India, the largest public sector bank has started issuing RuPay card only three months back and has realised the benefits of the same. According to SBI officials, though it has long term agreement with Master and Visa cards, still it would be good for the bank to pay money to them and switch over completely to RuPay.

Experts believe that if only SBI adopts RuPay fully, the scheme would be a success. Although for international operations, fee of RuPay is yet to be decided, the NPCI says that it would be better to keep it low to maintain it attractiveness in international business also.

In the first week of July 2014, the secretary, department of financial services of the Union ministry of finance has written to CEOs of all the public sector banks urging them to issue RuPay cards to all new customers and the existing customers who have not been issued debit cards so far.

Banks have also been asked to install RuPay card terminals in commercial establishments. So far there is a system of issuing only one type of debit card; however if one desires to get Master and Visa card, he/she can be issued the same along with RuPay card.

Those who are used to Master or Visa card need to be lured gradually towards using RuPay as it will prove to be a win-win situation for all, as it would not only reduce cost of transactions significantly, but also increase the card penetration in the country, especially rural areas.

Wednesday, December 25, 2013

Central Bank of India launches new mobile banking app, RuPay debit card


The Central Bank of India, which is celebrated its 103rd Foundation day on Monday, has launched a new mobile banking application and a EMV (Europay, Mastercard, Visa) compliant 'RuPay' debit card.
Finance Minister P Chidamabaram launched the scheme, along with 103 branches and 103 ATMs of the bank, through video conferencing.

Rajeev Rishi, Chairman and Managing Director of the Bank, said the card would help traders to draw Rs. 40,000 a day or Rs. 1 lakh in case of international transactions.

The RuPay Debit Card would be accepted at all channels, including - ATMs, PoS machines, e-commerce sites, now that EMV chip and PIN cards with global acceptability have been introduced, an official of the bank said.

The EMV-compliant RuPay Debit Card is based on the Swadeshi Platform and is more secure with in-built security chip, he said.

The mobile banking application is said to be intended to promote greener and eco-friendly channels of banking, while at the same time facilitating all types of customers to avail banking services on the go.
Rishi said the bank had always been a common man's lender and chose the occasion to focus on the rural and underprivileged sector as well.

The Central Bank of India also launched a special Chola Arogya Bhima Health Insurance Policy through the Finance Minister, to provide affordable health insurance to 1.03 lakh rural families. 503 women's self-help groups were linked with the Bank's financial assistance.

R K Goyal and Animesh Chauhan, executive directors of the Central Bank, were also present at the occasion.

The finance minister also inaugurated the Central Bank's CSR activities in 103 government schools (100 in Central Bank's lead districts and three in Sivaganga District).

Tuesday, November 5, 2013

Brand play in cards business - Rupay Card

While Visa and Mastercard slug it out for leadership, analysts say RuPay has the potential to cause disruption and eat into their market share.

Conventional wisdom says customers in India couldn't care less whether they have a Visa, Mastercard, or RuPay in their wallets as credit and debit cards are known more by the issuing banks than the card company. But the three big card brands obviously think otherwise.

While Visa continues to be the larger player in terms of market share, MasterCard is slowly, but surely, bridging the gap by offering additional features on the card.

So how do customers choose between a Visa or MasterCard? According to Nitish Asthana, Executive Director, First Data, ICICI Merchant Services, the affinity of the customer to the issuing bank plays an important role along with the credit limit, simplified applications process, offers, rewards and the reputation of service.

"Visa and MasterCard are well entrenched brands and widely accepted across all merchant outlets and e-commerce websites," he says.

Akhilesh Tuteja, partner and national head, IT Advisory, KPMG India says that both Mastercard and Visa enjoy similar brand value, though Visa is perceived to be a more popular brand than Mastercard because Visa has an aggressive marketing strategy and is seen more often.

"To the end customer, it does not matter whether they hold a Visa card or one from Mastercard because both are accepted at most and similar merchant establishments. Offers and reward points are the other important features of a card. However, these are mostly bank initiated and rarely payment gateway initiated," he says.

Visa is the first card that banks always start their card business with, says Uttam Nayak, Group Country Manager for India and South Asia, Visa. "We are leaders because from a bank's perspective our products are simple and easy to use. Our implementation and execution is robust and we have a developed a template for launches. We know what kind of operating process and IT infrastructure is required, how to write a policy document and our cards are easy to test at POS and ATMs", Nayak says.

If Visa was the first to offer Aadhar as an identity solution for e-KYC, MasterCard is not too far behind and is in the process of launching its own Aadhar linked solution, says Ari Sarker, Division President, South Asia. The gap between Visa and MasterCard is narrowing, he insists.

His claim is borne out by Hari Shenoy, Digital Marketing, brand-comm, who says, Visa leads as far as size is concerned, whilst MasterCard is reportedly accepted in more countries. Visa's network used to be larger previously, but now MasterCard's network is on par. When compared to advantages that a brand like Visa could have, it is increasingly getting narrowed.

"Increasingly, cards tailored for certain lifestyles attract consumers from that segment- eg, Airline co-branded cards that offer better travel rewards, shopping affinity cards, etc. Premium and platinum cards are on the rise," says Asthana of First Data.

Recognizing this, Visa has associations with Olympics and FIFA globally, since these bodies symbolise highest quality of skill sets, points out Nayak. In local markets, the association is with local properties. For instance, in India, Visa tied up with Sachin Tendulkar, way back in 1996.

"From a consumer's perspective, we have tie-ups that are relevant to them. The tie-up with Cafe Coffee Day to offer discounts at airport lounges for Infinite card holders and 10 per cent cash back for frequent flyers are some instance of this. Currently we are working on a platform for bill payments because people have to pay bills," Nayak says.

MasterCard is working on a contact-less card and a pilot project is expected to be launched late this year or early next year, Sarker says.

Apart from convenience and tie-ups, security is another area of concern for customers while choosing the card and both players are aware of this. Both of them offer the 'Zero-liability feature' in their cards, where in if the card is stolen or misplaced, the cardholder is not liable to pay for any transaction made on the card. "We realise that fraud is a big concern and we put customer at the centre of everything," Visa's Nayak says.
Another feature that Visa has introduced is Visa Risk Manager, which was introduced in 2011. This identifies a transaction that is not typical of the customers' transaction and blocks it. On its part, MasterCard has a similar feature, called MasterCard inControl. The technology allows cardholders to determine how, when and where a card may be used. Issuers can deliver real time information to cardholders and establish controls.

According to KPMG's Tuteja, Visa scores on dispute resolution because the process smoother. This also shows that Visa has made better investments in their back-end support system than Mastercard.
Queering the pitch for them could be RuPay, which has recently entered the e-commerce space and is part of the payment gateway options, making analysts bullish on its prospects. Shenoy agrees that RuPay has the potential to cause disruption and eat into Visa and MasterCard's market share. "Many nationalised banks, cooperative banks and a few private banks are part of the RuPay network. It has a lower transaction fees that will benefit banks as well", he says.

Loyalty programs will be key and will drive stickiness to merchants and banks alike. Customers are expected to seek value on the transaction experience, with features such as secure wallet and time of the transaction on the internet gaining more prominence in the decision.


• Plans a contact-less card, where you can tap and pay
• Will launch MasterCard inControl with cap on expenses
• Offers zero-liability feature in which transactions made through PoS will be covered

• Offers zero-liability feature
• Offers Visa Risk Manager -identifies transaction(s) that is not typical of a customer and blocks it
• Working on a platform for utility bill payments

Wednesday, October 23, 2013

Insurance cover coming for online fraud - Rupay Card

Both Visa and MasterCard offer this feature. RuPay cards by NPCI will also start offering this by the end of this year or early January,

With the rise in cases of online fraud, National Payments Corporation of India (NPCI) has decided to provide an insurance cover for such transactions.

NPCI will tie up with general insurance companies for this; it has called for a Request For Proposal (RFP). This would cover both domestic and international transactions, all those done by swiping a card, PIN-based transactions on ATMs or points of sale and e-commerce transactions with two-step authentication.

According to the Kaspersky Consumer Security Risks Survey, a global study conducted by B2B International and Kaspersky Lab in the summer of 2013, about 41 per cent of users who lost their money as the result of financial cyber-fraud failed to get a single cent returned to them. And, only 45 per cent of users who suffered through online fraud were fully compensated. In 17 per cent of cases the money disappeared during e-banking sessions; 13 per cent of the victims were customers of online stores.

“Technology is changing the fraud landscape and challenging the boundaries of fraud risk management. The (earlier) frameworks to mitigate simple frauds are no longer effective,” Rohit Mahajan, partner and co-head, forensic services, at KPMG in India, had said while issuing an India Fraud Survey last year.

The NPCI insurance cover will be over and above any policy taken by a member-bank. The policy will cover compromised and disputed transactions carried on the National Financial Switch (which facilitates inter-bank ATM transactions) ATM Network. It will also cover disputed transactions on the NFS Network. The RFP issued by NPCI is to identify and appoint the general insurer for providing insurance cover for fraudulent transactions that result in financial loss to the customers of NFS members or sub-members; also for non-bank ATM operators.

“This is a good opportunity for the insurance community. We will be interested in taking part in the bidding process, since it is a large and prestigious contract,” said a senior official of a state-owned general insurance company.

NPCI will initially cover Rs 180 crore of approved financial transactions under the insurance policy with the selected bidder. If the transaction volume goes beyond the initial committed volume of Rs 180 crore, NPCI shall request an additional cover.

The overall insurance cover that will be provided will be Rs 10 crore and the per-card cover will be Rs 50,000. The insurer (which wins the bid) will have to settle claims within 30 days of claim submission by NPCI. Further, the bidder will also have to honour the request from any member-bank(s) for any additional cover sought, once the policy is issued to NPCI and is in force. The premiums will be paid by NPCI.

To be eligible for the bid, an insurance company should have a minimum of three years of operations in general insurance in India as on March 31. Also, a minimum gross direct premium income of Rs 250 crore for 2011-12 and 2012-13, respectively. The non-life insurer is also required to have a minimum claim settlement ratio of 75 per cent in the past three financial years and not be currently blacklisted by NPCI, any government body or financial institution in India. All this would mean only the large private general insurers and the four state-owned general insurance companies will be eligible.

In case of a disputed transaction using a debit/credit card, it is the customer's responsibility to prove he is not at fault. Till then, they are liable to pay for the transaction. As a protection against this, one can opt for credit or debit cards which have the zero-liability feature. Both Visa and MasterCard offer this feature. RuPay cards by NPCI will also start offering this by the end of this year or early January, said an official.

Saturday, October 19, 2013

Banks yet to cut debit card fee at fuel pumps - Rupay Card News

A year after the Reserve Bank of India (RBI) announced a cut in charges on debit card transactions, banks continue to impose a fee of 2.5% for payments at petrol pumps, thereby making an undue gain at the cost of the consumer. Earlier this month, large banks thwarted an attempt by the RBI-promoted National Payments Corporation of India (NPCI) from capping charges on debit cards that are part of NPCI's Rupay network.

Last year, RBI asked banks to cap the charges on debit card transactions at 0.75% for transaction values up to Rs 2,000 and 1% for larger transactions. But in debit card transactions at petrol pumps, banks continue to impose a 2.5% surcharge, which are mostly passed on to the consumer.

Sources said that NPCI had sent a communication to banks asking them not to charge more than 1% on its Rupay cards. Rupay cards were introduced by NPCI as India's answer to MasterCard and Visa. Sources said that the move has been stymied by banks who have called for more discussion on the issue.

The 2.5% surcharge has its origins in the days when credit cards were in their infancy and debit cards non-existent. Typically, when a bank installs a credit card swipe machine at a retail outlet, its agreement with the merchant bars any kind of surcharge being passed on to the customer.

But in the case of petrol pumps and Indian Railways, an exception was made allowing them to pass on the charges (described by banks as 'merchant discount rate'), to the customer. The exception was made to end an impasse where these government entities were refusing cards on the grounds that their margins were too low to absorb the credit card charges of 2.5%.

RBI, while slashing charges on debit cards, had used the rationale that the transaction cost of credit and debit card should not be identical. This was because credit card transactions required the bank to provide free credit to the customer until the monthly bill was issued. The bank also took on the risk of the customer defaulting on his obligations.

In debit cards, the money goes straight out of the customer's bank account and the only expenses are on account of using the network and in respect of security of transaction. In the West, regulators have already started capping charges on debit card transactions.

Bankers say that a huge transformation is taking place in payments as debit card transactions are set to outstrip payments by credit cards in coming years. In July 2013, banks saw 4.23 crore credit card transactions as against 5.24 crore debit card transactions. In value terms, however, credit card transactions continue to be higher at Rs 11,038 crore as against Rs 7,722 crore under debit. With the focus now on financial inclusion, the number of debit cards and set to go even higher.