Rupay to replace Visa, MasterCard
After almost two years of planning, the National Payments Corporation of India has at last finalized the proposed unique India Card which once commercially launched would be an domestic alternative to the global real-time payment processing firms like Visa and MasterCard. The official said the leading financial consultancy firm Ernst & Young (E&Y) will develop and roll out the entire architecture, including the design and software for the Rupay card. The NPCI will initially launch domestic ATM/debit cards to begin with and then would hit the credit card market later on. In 2009, the RBI had asked the Indian Banks Association to launch a not-for-profit company and design a rival card, then tentatively called India Card, that meets the requirements of the domestic banks. And finally, RBI’s plan is materializing and Rupay will be like the Union Pay of China, which is the domestic real-time payment processing firm for Chinese banks, and was planned to be launched last year. The commercial launch is expected in a few months, once the systems and network are in place. Domestic banks now have no option but to tie up with Visa or MasterCard for connectivity between cardholders, merchants and issuing banks not just within the country, but across the globe in the absence of a domestic card. Every transaction done here using a debit or credit card issued by a domestic bank is routed through network switches owned by Visa or MasterCard, which are based outside the country. But now the Rupay card would eliminate the need for this connectivity. Domestic banks paid around Rs 500 crore last year as fees to these global card firms for processing debit and credit card payments, 90 percent of which were domestic deals.