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How RuPay aids govt’s financial inclusion thrust

RuPay, the name being a portmanteau of “rupee” and “payment”, has been heavily promoted by the governmentPremium
RuPay, the name being a portmanteau of “rupee” and “payment”, has been heavily promoted by the government

  • India’s first and only card payment scheme RuPay grew rapidly in the last three years, capturing over half the market and leaving behind global giants in the payments space
  • Mint looks at RuPay’s journey so far and what is holding it back from becoming an international player

1) What is a RuPay card?

RuPay is a homegrown card payment scheme launched by Reserve Bank of India-backed National Payments Corporation of India (NPCI). RuPay, the name being a portmanteau of “rupee" and “payment", has been heavily promoted by the government. The seven-year old card system competes against global payment network firms like MasterCard and Visa. The card broadly comes in five variants. One such variant, RuPay Contactless card, acts as a national common mobility card, allowing users to pay for bus and metro charges besides making payments for toll and parking. It can be used at ATMs as well as for online payments.

2) Why is RuPay gaining prominence?

The idea of RuPay was devised to promote the use of electronic payments as well as to expand the idea of financial inclusion. The prime minister’s flagship scheme for financial inclusion to provide affordable basic banking services, the Jan Dhan Yojana, gave impetus to the payment scheme as its debit cards were issued to every account opened under the scheme. It moved towards capturing close to 60% of the market in terms of issuance of cards. Besides, RuPay is cheaper and more affordable compared to foreign company cards such as MasterCard and Visa, as its transactions are processed domestically.

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(Graphic: Paras Jain/Mint)

3) What are the statistics?

There were 60.76 million RuPay transactions worth 8,723 crore at PoS terminals in June, up from 71.18 million transactions worth 6,079 crore last year. Value and volume of transactions rose 65% and 51%, respectively in FY19.

4) What are RuPay’s limitations?

RuPay card has a very limited international presence, even as it has tied up with global payments networks like Discover, Diners Club International, PULSE and others to help customers make international purchases and withdraw cash outside India. People travelling abroad tend to prefer Visa, MasterCard and American Express due to their higher acceptance and comfort built over the years. Typical users of cards are still shy of using RuPay due to factors like lack of awareness and brand appeal.

5) What is being done to promote RuPay?

The Centre and RBI have been trying to promote digital transactions. NPCI, banks and the Centre will widen and deepen the usage of RuPay to enhance its brand value globally, according to RBI’s vision for the next three years. To ease remittances into India and help Indian travellers make payments overseas, a Nandan Nilekani-led expert panel on digital payments recommended NPCI to prepare an international-ization plan for Indian payment systems such as RuPay and BHIM unified payments interface.

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