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.
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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.
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?
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.
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!
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.