National Payments Corporation of India—a Reserve Bank of India initiative—is set to replay the ATM revolution in the cards business with the launch of RuPay debit cards, which undercut Visa and Mastercard on processing fees on transactions. Coinciding with the launch, the central bank has also directed banks to cut charges levied on shopkeepers for facilitating debit card payments. On Monday, four large public sector banks State Bank of India, Bank of Baroda, Bank of India and Union Bank of India launched the first set of RuPay cards in India. The RuPay card is meant to be on the lines of China Union Pay—a Chinese government promoted payments and settlement platform for card transactions that broke the Visa-Mastercard stranglehold. Two years ago, NPCIL cut the charges for facilitating customers use their debit cards in ATMs of other banks. It has now promised the same in the card space. First in debit cards where processing fees will be 40% lower and later in credit cards which will be launched from 2015. Although shops will be the initial beneficiary of lower debit card charges, it will ultimately benefit customers as it will make it viable for shops to accept card payments for even low-value transactions. Also low-margin businesses which refused to accept cards because of charges of around 1.8% at present will be incentivized to accept card payments. G Padmanabhan, ED, RBI, said while RBI did not interfere in pricing the interchange fee debate had become louder after the United States recently intervened to ask banks to bring down interchange fees on debit card transactions. According to A P Hota, MD & CEO, NPCI India will also save hundreds of crores in foreign exchange by having a domestic payment system as Visa and Mastercard are paid in foreign currency.

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