RuPay, India’s first domestic real-time payment processing system, to be launched in March 2012
Alekh Angre 18 October 2011

For the RuPay launch, the National Payments Corporation of India is waiting for PoS clearance to kick off the service which is set replace the processing systems of global majors like VISA and MasterCard

After much deliberations and hype over the RuPay card, the unique domestic card in India which is set to replace global real-time payment processing firms like VISA and MasterCard, the service will be commercially launched with full functionality by March 2012 by the National Payments Corporation of India (NPCI).

AP Hota, chief executive officer and managing director, NPCI, told Moneylife, “Currently RuPay cards are being issued with limited functions, they are usable only in ATMs and micro-ATMs (used by bank business correspondents). Once we get the clearance for PoS (point-of-sale) usage, which is expected to come about in March 2012, the card will be launched with full functionality.”

The RuPay initiative entails the setting up of a network switch, which acts as a payment gateway that connects all ATMs and PoS terminals.

An NCPI spokesperson said, “Once PoS acceptance and e-commerce infrastructure is ready, NPCI will go ahead for final approval for rolling out RuPay cards that would be accepted on all channels.”

Since June 2011, RuPay cards have been issued with limited functions, and only used as ATM and micro ATM cards. These cards are not used for other commercial purposes such as usage in departmental stores and shopping centres. Four banks have issued this card. “The RuPay cards issued by four banks are widely used in around 85,000 ATMs across the country. Co-operative banks such Gopinath Patil Parsik Janata Sahakari Bank, NKGSB Cooperative Bank and Kashi Gomti Samyut Gramin Bank (which is a regional rural bank or RRB), have issued RuPay for ATM usage, while Bank of India has issued (RuPay) for micro-ATMs for the purpose of the business correspondents of the bank,” added Mr Hota.

Currently, domestic banks 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 Indian payment processing system.

Every transaction done in India using a debit or credit card issued by a domestic bank is routed through network switches owned by VISA or MasterCard, and both entities are based outside the country. But now RuPay would eliminate the need for this connectivity outside India for domestic transactions.

NCPI plans to focus on urban co-operative banks and RRBs. “We plan to enter a market mainly consisting of urban co-operatives and RRBs since they don’t issue any cards at the moment, and there is no other player in that area,” said Mr Hota.

In 2009, the RBI (Reserve Bank of India) had asked the Indian Banks’ Association (IBA) to launch a not-for-profit company and design a rival card—then tentatively called ‘India Card’, which was to meet the requirements of domestic banks.

And finally, the RBI’s plan is materialising and RuPay will act like Union Pay of China, which is the domestic real-time payment processing system for Chinese banks.

Comments
Sonu
1 decade ago
RBI seems to be making a mistake by depending on a public utility for such a crucial service. Let's face it - are any of us happy about the way government departments serve people. Scams have become a way of life in this country and this can also become embroiled like the UIDAI has now become a tug of war. Why fix what ain't broken?
Malq
Replied to Sonu comment 1 decade ago
Well, if it is pure corruption, then the two competitors probably wrote the book on it. Anyways, RuPay will be in open competition with the others, so let the best provider win?
Jingo
1 decade ago
Well... In these times where the government is facing one corruption story every day, I think this one will also come out of closet soon. Why are all ATM transactions in India routed through only one switch provided by FSS, and why is POS also going to be routed throught is questionable. Also questionable is whether we should be rejoicing at a government monopoly replacing a private competitive play where banks benefit from the international connectivity, and marketing muscle of two of the most powerful brands of the world. It should be a war on corruption in India and by extension on the usage of cash prevalent in the country.
Malq
Replied to Jingo comment 1 decade ago
The answer to your question is that it is an open level playing field, and whoever is more efficient wins, marketing clout regardless. Good luck to the. Duo who have tried to make global duopoly and are already learning competion thanks to CUP.
Jingo
Replied to Malq comment 1 decade ago

Let me assure you that there is nothing competitive about RBI arm twisting banks to use NFS/FSS only for domestic transactions. If these organizations were corrupt, it wouldnt probably have cost a lot of money to get a diktat to RBI to stop pushing banks on this. Bank CEOs do not take it up with RBI for the fear of incurring wrath and not getting the desired new licenses. Payments for all banks in India is a small part of retail bankingand hence they dont bother. You would probably not be aware of the reconciliation issues banks grapple with due to NFS. NPCI brags about the push RBI is making to banks to issue Rupay cards or even bypass the established payment schemes altogether. Dont think thats open market.
Also dont think we in India need to follow China's lead. Though I would like to believe that our country would be much better of with a 2-3 party democracy rather than the ineffective one we are saddled with.
Malq
Replied to Jingo comment 1 decade ago
Jingo, many of us know the payment processing industry inside out, so what is your point? That India should roll over and play pet poodle to the duopoly of associations with their one world order charter from the Illuminati? The "established payment processing industry" has one objective, and that is to impose economic slavery on the rest of the world, what are you about when you bring in unrelated parameters? I think RuPay is th best thing to happen for Indians and the global rollout is what should be expedited.
Jingo
Replied to Malq comment 1 decade ago
Well... I am not sure if I know the payments induatry as well as you do. You probably worked in one of them in the past and had to get out for some reason. You probably would have your own reasons for the rationale, but so do I. Its perfectly reasonable to bring competition in the arena. So look at Allahabad Bank signing up with Amex for launching credit cards or HDFC Bank announcing that it will launch a Diners Club credit card. It proves competition is well and truly there for the famous two. My point was pretty clear - have competition but have a level playing field. Why should the honchos at RBI dictate terms to Banks to switch transactions through a particular network? I find the rationale of RBI very wierd - banks pay 500 crores to payment schemes every year. So? Banks pay becuse there is value in electronic payments for the banks. Banks can expand their customer coverage without necessarily having to invest in opening branches or hiring more resources to serve those customers. The payment instruments like cards reduce costs for the banks as well as increase customer convenience. So, lets not fool anyone about banks being subjected to high costs, et al.
If such rationale were to be used, then we would next have the Ministry of Processed Food come up next and demand nationalization of Coke and Pepsi plants!!!
I hope someone at the Competition Commission of India were to read this and take suo moto cognizance of whats happening here.
You have used some really flowery language there. My compliments. I dont think any corporation except the Reliance group and any family apart from the Gandhis can have such an effect on India. 😄
If DoT were the only one to continue to provide the telecom services in India, tele density in this country would still have been languishing in its teens.
So while its great to be a regulator who is actively working on improving the industry standards, processes, etc., it becomes a different matter altogether when regulator becomes a player itself or is biased towards one of the players. How would Sucheta like it if SEBI were to dictate the mutual fund distributors to sell schemes of only one or two MFs?
Get what I am saying?
Malq
Replied to Jingo comment 1 decade ago
Level playing fields are now global, and in their absence, goalposts can and will be changed to suit something called national interest as well as democratic aspirations. The bigger issue here is not the fees which are what they are, it is the economy, and for that you have to think on a larger canvas. Nobody is dictating anything, but if the Indian government as the biggest employer provides a better deal with RuPay then why would people not shift? As for the CCI, agreed . . . But that would impact Visa / MC / AmEx on a global basis for their monopolistic stands in India as well as the rest of the world, but hey, go right ahead - I've seen the risk analysis document on that aspect, which is keeping other international monopolies out, too . . .

The knee-jerk by visa mc Amex in this case is more like crying foul after breaking every rule in the book. RuPay is going to be better than CUP, also because the tech and backend are Indian.
Jingo
Replied to Malq comment 1 decade ago
As I said you probably know much more about how these payment schemes operate than I do. In banks, we extract our flesh of pound by oitting one against the other. We hope we would have the same advantage when Rupay comes. As of now all indications are that we would be pushed to accept Rupay as the default debit brand with no choice.

I wonder from where these misplaced sentiments of national interest and "democratic aspirations" are coming. We should much rather be worried about the fact that while 80 percent or more of our nationals cannot afford to buy a home of their own ue to high land prices, the Government keeps making it easier for foreigners to buy properties here in the garb of private equity and increase prices further. Rahul Gandhi reiterated his father's famous comment of 15 paise of every rupee spent reaching it intended beneficiary. To protect the 85 paise from pilferage should be of far more interest to people who matter. To control inflation and bring the cost of living down should be of interest to RBI and the GOI.
I dont think there would be a semblance of doubt kn what most Indians would think RBI should be actively worried about and try to solve!!!

Instead of hilariously trying to vilify the payment associations for bringing electronic payments in the mainstream, one would do better to try to create an atmosphere where banks can actively engage them to take financial inclusion beyond buzz words and into reality!
malq
1 decade ago
This is good news, and very overdue, hopefully taking India's economy out of the vice like grip that entities and associations like Visa, MC, AmEx have on the American and European economies. It is also suggested that some more care be taken on ensuring that the back end technologies are fully controlled in India, unlike in the case of CUP, where the American payment processing companies had muscled in (though the Chinese, after much effort, were able to remove them).

The importance of RuPay will be felt when more and more transactions start going through RuPay, Bravo, RBI, bravo NPCI - especially for resisting the pressures from within . . . and some of us know who they are.
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