RuPay – #MakeInIndia answer to the Global Payment Platforms – Visa & Mastercard

In 2009, RBI had asked the Indian Bank Association to create a non-profit payment solutions company which will design an indigenous payment card offering state-of-the-art technology that is secure, robust, scalable, simple and cost-effective meeting the requirements of having domestic, open, multilateral system of payments.

The need for such a system arose from the absence of a domestic price setter that had caused the Indian banks to bear the high cost for affiliation and the connection with international card associations schemes such as Visa and Mastercard resulting in the need for routing even domestic transactions which account for more than 90%, through a switch located outside the country.

RuPay card scheme was conceived and launched by National Payments Corporation of India (NPCI) on 26 March 2012. It was created to fulfil the Reserve Bank of India’s (RBI) vision to have a domestic, open and multilateral system of payments.

RuPay facilitates electronic payment at all Indian banks and financial institutions. NPCI maintains ties with Discover Financial, JCB to enable RuPay card scheme to gain international acceptance.

Breaking the Foreign Hegemony

Backed by strong and robust technology guidance and low transaction processing fees, RuPay set out to disrupt the status quo enjoyed by the Visa-Mastercard in the domestic market. RuPay’s suite of products – RuPay Credit, Rupay Debit, RuPay Prepaid and RuPay Contactless has enabled it to make rapid inroads into the market, helping it gain market and merchant acceptance across the country.

Backed by the Govt’s vision to expand the domestic payments services in the country, RuPay has leveraged the existing Digital India stack to issue nearly 21 crore cards to Jan Dhan Yogana account holders. RuPay’s meteoric rise to the top is heralded by the following data points:

  • About 60 crore cards have been issued as of March 2019 by 1,100 banks giving it more than 58% market share in the country’s card issuance market, beating the much older duo of Visa and Mastercard by number of cards issued
  • RuPay holds about 30% market share by volume and value of transactions made
  • RuPay reported 100 crore (1 billion) transactions through both online and offline merchant payment modes in financial year 2019, a nearly 70% jump compared to the 66.7 lakh (667 million) transactions in financial year 2018

What the above demonstrates is that RuPay is not just a leader in the domestic market but also a direct challenger to the global players who have maintained a hegemony in the payments services space.

Taking RuPay Global

RuPay’s global ambitions started early – in fact, as early as 2014, RuPay had started issuing global cards. In 2012, NPCI entered into a strategic partnership with Discover Financial Services (DFS) for RuPay, enabling the acceptance of RuPay Global Cards to utilize the Discover, Diners Club International and PULSE networks for international purchases and cash access outside of India. Both companies were also working to implement D-PAS, Discover’s EMV technology to offer chip-based cards to RuPay card members.

In 2018, Singapore became its first international partner to promote RuPay cards in the international market. The RuPay digital payments system was linked up with Singapore’s 33-year-old Network for Electronic Transfers (NETS). RuPay users will be able to make payments at all NETS acceptance points across Singapore.

In 2019, PM Modi launched RuPay services in 3 countries –

  • Maldives
  • UAE
  • Bahrain

All 3 countries have sizeable population of Indian expats and tourists who contribute vastly to the local economy in these countries as well as contribute to foreign remittances received in India. Establishing a seamless payments interface thus helps achieve two important needs:

  1. Seamless customer experience across international borders
  2. A strong strategic objective of establishing the international network for a domestic digital payments ecosystem that will help RuPay compete with global players in the global markets

What India’s FinTechs have to gain from RuPay’s global ambitions?

RuPay gaining an international presence would be extremely useful for India’s FinTechs.

  1. First, it helps establish a digital footprint in the target nation.
  2. Secondly, it helps establish merchant and business acceptance in the foreign market for Indian goods and services in the financial space. This would help reduce the lead time required to setup a new market from scratch
  3. Most importantly, it helps Indian FinTechs leverage its learnings from challenges in the Indian market to build and deploy secure and robust financial services in these countries.

Indian FinTechs must be ready to ride the digital wave that comes with the global rollout of such a dominant payments service in these markets. Payment wallet firms can build travel-card based services that cater to the large no of Indian tourists in the market while credit firms can now reach out to Indian expats and even local citizens and leverage the existing business data in these countries to lend to customers in these markets. The possibilities are endless. The only question that remains to be witnessed – “Are they ready to seize the moment?”

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