RuPay to tap premium customers as banks renew deals with Visa, Mastercard

The National Payments Corporation of India (NPCI) is looking at increased uptake of its RuPay debit cards among premium customers as deals signed between banks and its global competitors Visa and Mastercard expire over the next few years.

While RuPay controls 42 per cent of the Indian debit card market, it contributes to only 16 per cent of Point of Sale (PoS) and e-commerce transactions. This is largely due to the fact that a majority of the RuPay cards (around 220 million) are held by benefactors of the Jan Dhan Yojana.

“Visa and Mastercard are international companies; they have deep pockets. At the time of the launch of the RuPay debit card, they had signed three- to five-year deals with banks. Once these deals expire, and banks have an opportunity to change their portfolio, they might consider RuPay,” said A P Hota, managing director and chief executive officer of NPCI.

RuPay was launched around five years ago and designed as a local payment mechanism and as an alternative to Visa and Mastercard. NPCI has already signed up more than 750 banks, including cooperative banks and regional rural banks, far larger than the 50-odd top banks Visa and Mastercard used to cater to prior to RuPay’s entry. Despite this deep penetration, top banks in the country continue to issue Visa and Mastercard debit cards instead of RuPay cards.

Hota said the deals signed between banks and Mastercard and Visa stops them from issuing RuPay cards despite the NPCI’s charges being one-third of what the two global firms charge on every transaction. While banks do offer customers the option of which card provider they want, customers often — due to the lack of awareness — leave it up to the bank to pick either of the global providers.