wordpress blog stats
Connect with us

Hi, what are you looking for?

Our take: RuPay cards get a push, as switching fees for online and PoS txns are waived

money-payments-bank-cash-free

The National Payments Corporation of India (NPCI) has waived off switching fees for all RuPay cards for ecommerce and PoS terminal transactions. This was in effect since November 11 and will extend to December 31, 2016. Of the 755 million debit cards in circulation RuPay cards account for 40%, around 302 million in total. IMPORTANT: this waiver of fees is not applicable to MasterCard and Visa. Note that RuPay’s network charges a flat fee of Rs. 0.9 per transaction on PoS terminals (Rs 0.6 from the issuing bank, and Rs 0.3 from the acquiring bank). Visa and MasterCard charge a variable fee  in proportion to the transaction concerned.

The NPCI added that the switching fee would be refunded to both issuing and acquiring banks before January 31, 2017. An issuing bank is the bank which issues a debit card while an acquiring bank is the bank which accepts the payment from a merchant. It also asked all banks to issue cards for current and savings accounts (CASA) which have no yet been carded to promote digital transactions.

The Jan Dhan advantage, but will it work?

It needs to be pointed out that a majority of RuPay cards are issued under the Jan Dhan Yojana scheme for financial inclusion (the number of RuPay cards from Jan Dhan Accounts stood at 194 million). As such, many of these cards are not being used at all by these account holders (23.7% of 25.5 crore accounts opened under Jan Dhan Yojana have zero balance).

Usage of RuPay cards for online transactions is dismal. According to a JM Financial report, RuPay said that the number of monthly online transactions increased from 0.2 million in April 2015 to 1.4 million in January 2016. The report also estimates that the value of online transactions in January 2016 increased to Rs 78.2 crore. However, the average ticket size of RuPay card at POS terminals is Rs 1,700 compared to Rs 1,329 for all debit cards (including Visa, MasterCard and RuPay).

Advertisement. Scroll to continue reading.

MediaNama’s Take: What it means for card holders and merchants

For RuPay card holders, the waiver of switching fee will not result in any benefit particular benefit to them. However, waiver means that the cost of transactions over the RuPay network will reduce for banks. Hence, banks will push the benefits of lowered costs to merchants. This might result with some merchants insisting on RuPay cards rather than MasterCard or Visa cards. 

Note that POS transactions have been failing at many terminals across the country following the demonetization. Manish Patel, CEO of Mswipe, pointed out that Visa’s servers failed with the additional load resulting in POS machines being unable to process many transactions.

RuPay, on the other hand, has been building its capacity for card transactions by moving to a new switching platform. AP Hota, CEO of the NPCI, said this in an earlier interview with MediaNama:

The old switching platform is the Eurnonet platform and the new platform is the FIS platform. The difference in the two lies in the capacity of processing. Now we can process only 40 million transactions a day. So on the whole RuPay’s network does about 25 million transactions. So now we are building capacity for 100 million now.

Perhaps this would result in fewer payment failures on RuPay cards.

Advertisement. Scroll to continue reading.
Written By

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

India and US come to terms on how to deal with the equalisation levy in light of the impending Global Tax Deal.

News

Find out how people’s health data is understood to have value and who can benefit from that value.

News

The US and other countries' retreat from a laissez-faire approach to regulating markets presents India with a rare opportunity.

News

When news that Walmart would soon accept cryptocurrency turned out to be fake, it also became a teachable moment.

News

The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.

You May Also Like

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ