Showing posts with label visa card. Show all posts
Showing posts with label visa card. Show all posts

Monday, April 8, 2013

Desi card RuPay gets global access

The National Payments Corporation of India (NPCI), which plans to rival Visa and MasterCard with its own RuPay Card, has got a leg up in its plans to provide international access to future RuPay cardholders following a tie-up with Discover Financial Services.

On Friday the two partners, entered the first phase of their partnership by providing Discover cardholders access to 85,000 ATMs in India which are part of the NPCI network.

Discover Financial Services is a banking and payments services company which competes with payment companies such as Visa and MasterCard and owns the card company Discover, Diners Club cards and Pulse ATM networks. Unlike Visa and MasterCard, which partner banks to enable them issue cards with similar features, Discover adopts a philosophy of partnering local payment networks across the world, including in China, Japan and Korea.

In China, Discover has partnered UnionPay, the largest network in China which will become available to RuPay global cardholders. Worldwide, Discover has a network of two crore retail outlets and 9.5 lakh ATMs which accept Discover Cards.

"We purely partner and do not have ambitions to compete with domestic networks," said David Nelms, chairman & CEO of Discover. He added that the Diner's Club credit card, which is being issued by HDFC Bank in India, is expected to grow significantly in numbers. "The alliance with NPCI marks another milestone for discover as the company has established network to network alliances across the globe. We plan to expand our acceptance footprint in the coming years throughout the country and provide our card members from all across the world the ability to use their cards at merchants across major metros and key tourist destinations in India," he added.

According to A P Hota, MD & CEO of NPCI, issuance of RuPay International cards would begin from July 2013 with two banks. NPCI started its services providing cheaper access to third-party ATMs by setting up a network with very low transaction charges with strong support from the Reserve Bank of India.

The next stage was to issue RuPay debit cards which would be accepted at merchant establishments across the country. The payments company has already enrolled around 85,000 point of sales terminals where Rupay cards can be accepted.

In the third stage, in May RuPay will have its own e-commerce platform to enable cardholders make purchases online at websites such as Indian Railways. "Rupay is also leveraging the EMV (chip card) technology of Discover to issue global cards. Cards, terminal and host specifications for RuPay Global Cards on D-PAS have since been released to banks," said Hota.

Sunday, March 31, 2013

Come April, you can use RuPay even online

The desi version of card payment platform – RuPay – is moving to the next level. Come April, the cardholders can make transactions even online too, marking the next step for an offering rolled out by the National Payments Corporation of India (NPCI) almost two years ago.

In the beginning, RuPay was ATM-only, but NPCI later started issuing debit cards for off-line retail purchases. The current move, which allows RuPay cards to be used for e-commerce payments, is bound to intensify competition for global rivals like Visa and MasterCard. For, RuPay cards come significantly cheaper.

These online-enabled cards may turn attractive for mainstream banks, unlike ATM-only and debit ones, which are targeted more towards co-operative and regional rural banks, and rural and semi-urban bank branches, respectively, because of less internet-savvy clientele there.
“Mainstream banks will not issue RuPay cards to their customers till the e-commerce option is enabled. From April, they will start issuing,” said A P Hota, managing director and CEO, NPCI. To begin with, two banks will issue new RuPay cards from the second half of April, and others are likely to follow suit, Hota added.

However, a lot of work needs to be done on RuPay debit cards as a big chunk of point-of-sale (POS) terminals does not still accept them. Currently, only 25% of POS terminals across India accept these debit cards, said Hota. NPCI hopes to wrap up the roll-out by July this year.

“Banks have to put field staff on the job to visit each POS terminal and install RuPay software there. These terminals have Visa, MasterCard and American Express software in them already,” said Hota. There are almost 8 lakh POS terminals in India as of January 2013, according to data from the Reserve Bank of India.
For now, NPCI is not in a hurry to offer RuPay credit cards anytime soon. Even as March 2015 has been set as the cut-off line for the credit card business launch, Hota remains sceptical whether that could be met. This is simply because it’s the debit card project that is hogging all the attention now.

Wednesday, April 4, 2012

Banks can save Rs300 crore annually by switching over to RuPay: NPCI

“Adoption of the RuPay Card will help banks save Rs250-Rs300 crore annually as our interchange charge is cheaper by up to 40% than what banks pay to foreign cards like Visa and MasterCard,” NPCI managing director and chief executive officer AP Hota said

Mumbai: A switchover to RuPay Card, the Indian version of Visa or MasterCard, can help domestic banks save as much Rs300 crore annually in transaction fees, reports PTI quoting the National Payments Corporation of India (NPCI), which launched the card last week.

“Adoption of the RuPay Card will help banks save Rs250-Rs300 crore annually as our interchange charge is cheaper by up to 40% than what banks pay to foreign cards like Visa and MasterCard,” NPCI managing director and chief executive officer AP Hota told PTI.

After years of preparation and soft launch, NPCI commercially launched RuPay Card on 26th March with major banks such as SBI, BoB, UBI, BoI, Corporation Bank and Axis Bank launching their domestic debit cards on the RuPay platform.

This makes the country second after China to have an indigenous electronic payment card.
Typically, banks pay around 1.8% of the transaction value in interchange charges. This is shared between the payment gateway operators like Visa and MasterCard, the card issuing bank, and the merchant.
While the card-issuing bank charges around 0.25%-0.30% of this, an equal amount is taken in by the merchant too, with the rest being retained by the card company such as Visa.

But Mr Hota said NCPI will retain only up to 60% of this around 1.2% going by the current fee structure.
According to the banks, foreign cards charge around $30,000-$50,000 as one-time fee and around $10,000-$30,000 quarterly.

In FY09-10, according to the Reserve Bank of India (RBI), domestic banks coughed out Rs490 crore in interchange charges to Visa and MasterCard.

For RuPay, there will be no one-time joining fee, and other charges would be around 40% less.
All the major banks are likely to be on the RuPay network in six months, Mr Hota said, adding that there was no compulsion to switch to the RuPay. “Our low cost should be reason enough for them to adopt our card. By March 2015, I expect at least half the market under the RuPay.”

His optimism comes from the low penetration among the regional rural banks, co-operative banks and small commercial banks due to high cost of joining foreign card payment system.

Another advantage, he said, is that as the transaction happens domestically, it will lead to lower cost of clearing and settlement, apart from the facility of paying in rupee.

Being a not-for profit company also helps us lower the cost, Mr Hota said.

He also said the RuPay would make debit cards safer by incorporating the pin number with each transaction. At present, only MasterCard requires the user to furnish the pin number every time the card is used.
RuPay will be accepted at all the 91,000 ATMs and over 6 lakh points of sale terminals in the country and in due course, it will be accepted on the Internet and also at ATMs/PoS terminals abroad. NPCI has finalised an arrangement with payment gateway Discover for international acceptance.

According to RBI data, there are nearly 27 crore debit cards in the country today.

SBI managing director and chief financial officer Diwakar Gupta said that though there is no compulsion, it makes business sense for banks to adopt RuPay.

Monday, March 12, 2012

Discover Financial Agrees To Alliance With Payments Group In India


--Discover to process transactions made with India's RuPay cards
--Discover and Diner's Club cards will be able to be used at ATMs and merchant terminals in India
--Discover is trying to grow its international footprint
NEW YORK -(Dow Jones)- Discover Financial Services (DFS) will process transactions made by cards on India's RuPay payment network under a deal aimed at bolstering Discover's international footprint.
The Riverwoods, Ill.-based credit-card company said Wednesday its alliance with the National Payments Corporation of India will also allow its own cardholders to use their cards at ATMs and merchant terminals in India.

The National Payments Corporation of India was established in 2009 to develop a payments card network similar those operated by Visa Inc. (V) and MasterCard Inc. (MA) for India. That network, RuPay, is still being built out.

"By opening up our global payments network to RuPay cardmembers, we are participating in one of the fastest growing countries for payment cards in the world," Diane Offereins, executive vice president and president of payment services at Discover, said in a statement. "Discover and Diner's Club cardmembers also will benefit from their ability to more broadly use their cards to access cash or make purchases throughout India."

Discover has had a presence in India, including a deal in which HDFC Bank, an Indian bank, issues Diner's Club cards in the country. Diner's Club is owned by Discover.

Discover, like American Express Co. (AXP), typically issues its own credit cards and operates a payments network that processes transactions, unlike Visa and MasterCard, which only process transactions. Higher transaction volume helps boost their revenue.

Discover has a smaller acceptance footprint internationally than does American Express, Visa and MasterCard, though it has been working to change that.

"We're working aggressively to make sure we have strong franchises in India and in China to make sure we can capture" growth in those markets, Roger Hochschild, president and chief operating officer of Discover, said at an investor conference last month.

As part of the new agreement, RuPay card transactions made outside India will be processed over Discover as well as Discover's Diner's Club and Pulse ATM networks. The deal will be rolled out in a "phased manner, starting with acceptance of Discover and Diner's Club cards at RuPay ATMs in India, followed by merchant terminals in India.

The deal is a "nice win for Discover," Sanjay Sakhrani, an analyst with Keefe, Bruyette & Woods, wrote in a research note Wednesday. However, the financial benefits of the deal aren't likely to come until the later stages of the rollout, Sakhrani wrote.

Discover's shares are up more than 38% over the last year. Its shares were up 1.4% at $30.34 in recent trading.

Thursday, February 2, 2012

RuPay may Open the Gateway to Inclusion

Source :

A few years ago, an arm of the Reserve Bank of India had launched the inter-bank ATM switch, a device that allows automated teller machines to talk to each other. This prompted the RBI to waive off an additional transaction fee that debit card holders incurred on using ATMs of other banks. The move, which initially faced the flak of the banking industry, led to an explosion in ATM usage across the country. Another such flare-up looks imminent with the upcoming launch of RuPay, a domestic payment gateway akin to global networks such as Visa and MasterCards.
Though industry experts are once again skeptical on the government playing the role of a service provider, if the ATM experience is anything to go by, creation of a domestic payment network will widen the role of credit providers, giving a boost to financial inclusion in the country’s vast rural hinterland.
Coming at an opportune time, when electronic payments are being seen as a tool to reach out to the unbanked, the RuPay card system — an initiative of the RBI-promoted National Payments Corporation of India — is creating unease among global card associations as it will reduce overall transaction cost for banks by introducing competition to international card schemes.
Recently, Visa invited some 50 Indian urban co-operative banks to make a presentation on its products with an aim to lure local lenders to join the global payments network. Visa’s efforts to connect with urban cooperative lenders, hitherto not a priority for card associations such as Visa and MasterCard, just five months
ahead of the RuPay launch is being viewed by experts as prompted by fear of impending competition.
Currently, Indian banks pay . 200-300 crore to Visa and MasterCard for processing debit and credit cards. This cost is expected to come down after the launch of RuPay card system, which is likely to charge a lower processing fee. The benefit of a lower fee will be reaped by customers as well to whom the banks pass on the cost.
The RuPay system will also lower the cost of transactions for shops that are reluctant to use the electronic mode of payment on which they
currently lose 1.5% of their margin. “Currently, the merchant fee is significantly high and there is room to bring it down,” says AP Hota, chief executive officer, NPCI. China already has its domestic payment network Union Pay, a benchmark against which RuPay may be compared. Union Pay has 200 member banks, including 30 outside China, and is accepted in 104 countries. The European Union has also been talking about a region-wide payments network.
The RuPay system also aims to build an environment in which payment information remains within the country. “Why should the transaction go international and expose itself to various risks,” says Hota.
Highlighting the high cost of creating a payment network, Visa and MasterCard feel that payment networks work better when there are fewer of them.

Ajay Banga, chief executive officer, MasterCard, in his maiden visit to India, after taking charge, pointed out that the launch of a local card system will not dilute the relevance of global card networks. Several countries where domestic proprietary networks were set up had turned to MasterCard to ensure that banks have the latest technologies, including fraud management, sophisticated scoring, fast transaction approvals, among others, he said. If every country strives to set up its own payment network, it would not only be very expensive, but also lead to systemic inefficiencies, he added. Amex and Visa also feel that they will continue to remain relevant in a market where growth opportunity is immense. Of the total bank consumer transactions in India, less than 5%, or nearly . 1.14 lakh crore, are in the electronic form. While the urban middle class is slowly migrating to electronic payments for bills, millions of man hours are still wasted by people standing in queues.
Uttam Nayak, India head of Visa, says that the country has a long way to go in electronification of payments. “But where I look for answers is in the kind of investments they (NPCI) will bring in. Secondly, they will have to convince customers that it is the most secure, reliable and convenient mode of payment,” he says. 

In the first stage, NPCI has launched the RuPay debit card. The first such card was issued by Gopinath Patil Parsik Janata Sahakari Bank. Although, not a debit card, the RuPay ATM card allows customers of rural banks and small cooperatives to ac
cess a wider ATM network.
According to Hota of NPCI, which has PSU banks as its stakeholders — the roadmap for RuPay is ready. The company plans to start with a RuPay debit card by the end of this fiscal, which will be accepted in 50,000 domestic merchant establishments. In the initial phase, RuPay will not have an international reach and can be used only for domestic transactions. “But, currently, over 94% of all transactions by Indian cardholders are within India,” says Hota. “However, we will have a leeway from the RBI to talk to international players about the acceptance of this card outside India.” Subsequently, NPCI will roll out credit cards, but that would be three years from now. 


The immediate test for the RuPay payment system will be to strike a chord with rural merchant associations and shops in order to build a payment network where the poorest customer has access to electronic fund transfer.
Also, such a network would require an investment of more than . 1,000 crore by the banking industry without immediate returns. The Unique Identification Authority of India and Indian Banks Association have identified the need for 12-14 lakh micro-ATMs, which are point of sale machines given to business correspondents.
Moreover, an increasing usage of mobile transactions, which enable direct debit through mobile phones, could pose a major challenge to the RuPay.

Thursday, January 5, 2012

Visa & MasterCard gone. Rupay card, bring it on

Rupay Card Logo
Source :

Finally it's here! The much talked about India card which will replace global payment players MasterCard and Visa in India. CNBC-TV18's Gopika Gopakumar finds out more about the Rupay Cards.

It may not be long before the logos of Visa and MasterCard disappear from your plastic cards. Instead these will be replaced by an Indian name Rupay. This is the new card payment scheme launched by the National Payment Corporation of India, a company started three years back by 10 banks, to oversee all retail payment systems in India. Currently, all card payments are routed through Visa or Mastercard which process these transactions outside the country, but this may not be the case in the future.

"There should be something domestic. Payment information is very sensitive. So there has to be repository of payment information with some institution. Why should banks in India pay such high fee to MasterCard or Visa," AP Hota, CEO, National Payments Corporation of India said.

Currently, banks pay around Rs 300 crore every year to Visa and MasterCard for processing all debit and credit card payments. NPCI says Rupay will reduce the cost for both banks and customers.
"We believe that it's possible to reduce the processing fee that banks pay to MasteraCard and Visa by half if not more. Rupay will be aiming at reducing the cost for the bank," Hota added.
Bankers too feel Rupay will be a viable option.

Alok Mishra, CMD, Bank of India , said, “It is indigenous and will be cheaper. Most people here don't travel abroad nor do they need settlement for Visa, MasterCard. What they require is a settlement here. And I think Rupay will work for them.”

Rupay's strategy
To begin with it focuses on tying up with 82 regional rural banks and 100 urban cooperative banks. Having issued 10,000 debit cards, it now plans to scale up by issuing Aadhar-enabled financial inclusion cards.
NPCI says it will be a while before the commercial banks start issuing Rupay debit cards as most of them already have tie-ups with global players. Besides, the regulator favours competition in this segment and so unlike the Chinese, may not make it mandatory.

Monday, October 31, 2011

Visa confident RuPay entry won't affect its dominance: Uttam Nayak, Country Manager, Visa

Source :

Global payment gateway Visa is confident that the entry of domestic payment network RuPay will not hurt its business in India. In an interview with Sangita Mehta, Visa's country manager, Uttam Nayak, talks about trends in the card industry, challenges for Visa and its plans to launch mobile payment product in India. Excerpts :

What are the trends in the cards industry?

On the credit card side, the focus is on premium customers. Focus is moving away from card numbers to profitable customers. Inactive card is draining a lot of their resources. So, the idea is to get fewer customers who use the card and that is where banks earn revenue. That is why there is attrition of cards by 7%, but transactions have grown 19% and spends have risen 30%.

All non-profitable, delinquent and inactive accounts have been closed. Also, a couple of players have exited and few others have slowed down. The big success has been on debit and prepaid cards. As banks continue to open new accounts, debit card issuance also grows. The growth is about 25% a year. People are using lesser cash and transacting more at point-of-sale and internet. Cash to cash-less migration is happening. E-commerce is growing for services such as buying movie tickets or paying bills.

What are the changes that are emerging on the payments side?

We have witnessed two big changes. One is the power of mobile. The frauds have gone up in the market such as counterfeiting at ATMs or point of sale. However, with SMS alert mandated by the regulator and the minute a card is misused the customer gets an SMS alert. Also, mobile payment and mobile banking and mobile way of transacting are significantly increasing. The second change is the increase in online transactions.

So isn't this a challenge for Visa?

We welcome it. To get physical point-of-sale terminal costs more money while online acceptance is much cheaper.

What are the challenges for you with Interbank Mobile Payment System (IMPS) kicking in?

It is account to account transfer and it is early days. One has to wait and see how it picks up.

So it has yet not affected your business? How is Visa gearing to meet competition from National Payments Corporation of India on IMPS?

One of the key things a customer looks for is frictionless payment. We had rolled out mobile payments in some countries and it failed or did not take off, because it had a lot of friction.

If Visa rolls out any such product will it be without any friction?

Absolutely. We are currently rolling our mobile payment product, which is a joint venture with Monetise. It addresses this point of being frictionless and customers don't need to provide any other piece of information. It will be rolled out end of this quarter or early next year.

National Payments Corporation of India will soon launch RuPay card, what would be the challenges for you?

There is no challenge. Visa and MasterCard have existed for 30 years and we have put all our might in what we call are priority market. Yet, if there is only 3% penetration that means that efforts have not been enough and investments have not been enough. So, more players have to come in. Where I look for answers is the kind of investment they are going to bring in.

There could be a fear that even this 3% could go to them?

The customer looks for convenience, security and reliability and NPCL has to say they have it. The customer has to touch and feel and see it. 

Given that it is PSU-promoted and they control 70% of the market share, could significant portion of customers shift to RuPay?

Customer looks for newer and superior products and value addition and that is where they will shift. And that is our core strength. We are innovative and have attractive marketing campaign. We have consumer insight and use that information to come up with better products. So, as long as we keep doing that we don't see any competition as a threat. If that was the case, we would not be making a significant investment in this country. The mobile platform is a joint venture and we have put a lot of money to develop it.

That could be in response to RuPay coming in?

No. It's part of our strategy. We have been here for 30 years, and consistently Visa has been investing and growing in this market.

Friday, September 30, 2011

Launch details of Rupay Card

The National Payment Corporation of India Ltd (NPCI) is planning to come up with India's first domestic payment service provider 'Rupay'. The 'Rupay' ATM card is aimed to target no frills account holders (NFAs) in collaboration with banks.

with this venture, majors in the payment space namely Visa and MasterCard are set to receive the first domestic competitor in Indian system.

All banks have been asked to open no frills accounts as part of the financial inclusion drive of the government.

NPCI aims to leverage on ATM switching infrastructure (the National Financial Switch) which will enable 'Rupay' cards to be used only on ATMs and biometric micro ATMs.

"As of now we are talking to four nationalised banks for introducing the Rupay ATM cards, which they will, to begin with, issue only to their no-frills accountholders. It will be a debit card which will work only on ATMs and biometric micro ATMs," said Mr A.P. Hota, Managing Director and Chief Executive Officer, NPCI.

"Banks will have to weigh whether to give 'Rupay ATM cards' only to new customers or also to old customers. They will have to write to customers giving them the option to surrender existing cards and get new ATM cards. This itself is a big job," said Mr Hota.

Speaking about competition with Visa and MasterCard, he said, "Ultimately, the winner would be the one who can offer the better product and better service at an affordable rate. If MasterCard and Visa can really provide service at an affordable rate, they will succeed. To beat NPCI or Rupay card, they might really lower their price drastically. And if they can sustain that for a decade, really NPCI is out. We have better things to do."

In this regard NPCI seeks to collaborate with the 82 regional rural banks (RRBs) of the country too.