What’s The Deal With RuPay Cards?

By Sanesh Mathew | April 30, 2017

What’s The Deal With RuPay Cards?

In 2012, India came up with its own payment gateway system called RuPay as an answer to the dominant foreign players, MasterCard, Visa and American Express. RuPay was launched by the National Payments Corporation of India (NPCI). The recent demonetisation episode saw a sudden rise in the use of RuPay Credit Cards and Debit Cards at point-of-sale (PoS) terminals at various merchant outlets in India.

RuPay is basically a coinage of two words – rupee and payment. This domestic plastic card was launched with the intention to merge payment systems within the country. It was brought to life in order to realise the RBI’s yearning for a domestic payment system with an open loop and multilateral approach.

Additional Reading: Demonetisation For Dummies: A Safety Guide To Cashless & Online Transactions

RuPay Debit and Credit Cards are similar to their Visa and MasterCard siblings and can be used to make payments electronically too. You can use them at ATMs and PoS terminals across the country, and on a number of e-commerce websites. Most of the public sector banks and a few private banks within the country have been issuing RuPay cards to their customers.

Now that you know the basics about RuPay cards, let us learn about the benefits of these cards. Shall we begin?

  • Less dependence on cash – If there is one lesson learned from the demonetisation wave that shook the country, it was that cash isn’t something that we can rely on. Those who were dependent on cash had a hard time surviving while the ones who had adopted cashless systems such as Debit Cards, Credit Cards or mobile wallets found it easier to manage themselves.
  • Cost-effective – Compared to other payment systems, the transaction costs involved with RuPay cards are significantly lower. Since the transactions made using these cards are processed in India, the service charge levied is way lesser than those levied by the foreign players. For example, if you’re making a transaction of Rs. 1,000 on your RuPay card, a service charge of Rs. 1 may be levied. On the other hand, if the same transaction is done via a Visa card or MasterCard, it may attract a service charge of Rs. 2.5. Make in India ki Jai Ho!
  • Fast Transactions – All the transactions made through the RuPay cards are much faster than those made through other payment gateways. This is because all the transactions made with a RuPay card are processed within the country itself.
  • Financial Inclusion – These cards were introduced as a measure to drive financial inclusion by involving all the economic classes within the country. It was necessary to include Debit Cards in the rural banking system in India. And RuPay cards were the low-cost option that was suitable for the Indian banking channel unlike Visa or MasterCard.
  • Information Sharing – With RuPay cards, the data of Indian consumers is secure. With other cards, consumer data is usually shared on an international level.
  • Alerts – For every transaction you make using your RuPay card, you’ll get an SMS notification. Ensure that you provide your correct mobile number when applying for the card.

Impact of Demonetisation on RuPay Cards

Demonetisation has definitely amplified the circulation, adoption of the cards as well as the number of transactions using these cards. The demonetisation episode was the perfect opportunity to promote RuPay cards as more and more people were shifting towards cashless transactions. Even people who never used the cards, which were given to them when they opened their bank account, started to use them.

Challenges Ahead

One of the biggest challenges that lie ahead for RuPay cards is their adoption in the mainstream business. These cards were issued along with the Jan Dhan schemes, as an effort to boost financial inclusion. So, the transaction size from these domestic cards are comparatively very low.

Another issue is that despite the numerous efforts towards financial inclusion, which includes the Jan Dhan Yojana schemes and no-frill bank accounts, there are a great number of people who don’t have bank accounts.

To attain success with these cards and the different schemes that they offer such as the Kisan cards, it is necessary to improve the availability of banking services and extend their reach to the remotest parts of the country.

What do you think about RuPay cards? Do you think this domestic payment system can compete with the foreign ones? Let us know your thoughts in the comments section below.

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Category: Credit Cards

About Sanesh Mathew

A talkative sleepyhead, Sanesh, enjoys watching horror movies, listening to music, reading all things related to personal finance and wandering aimlessly (walking meditation, he calls it!). He refers to himself as a 'simple human being with a rather chaotic mind'.

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