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India approves $170 million incentive plan to promote RuPay debit cards
India approves $170 million incentive plan to promote RuPay debit cards - Copyright Thomson Reuters 2021
NEWDELHI – India's cabinet on Wednesday approved a 13 billion rupee ($170 million) incentive plan to promote domestic RuPay debit cards and low-value digital transactions, in a move that could challenge the clout of rivals such as Visa and Mastercard.
Under the plan, the government will pay banks a percentage of the value of transactions done through RuPay debits cards and on low-value direct interbank transactions for a year starting April 2021, a government statement said.
The scheme would cover reimbursement of processing fees on digital transactions up to 2,000 rupees ($26.20), government officials said, but added it was unlikely to have much impact on big players.
"It will also help in making accessible digital modes of payments to unbanked and marginalised populations", the Indian government said in a statement, referring to people outside the formal banking and financial system.
As of November 2020, over 600 million RuPay debit cards have been issued by banks.
The plan will likely threaten the market share in India of rivals Visa and Mastercard. Earlier this year, Visa complained to the U.S. government that India's "informal and formal" promotion of RuPay was hurting it in one of its key growth markets.
Started in 2012 by National Payments Corp of India (NPCI), a government backed non-profit, RuPay competes with global payment firms Visa Inc and MasterCard Inc for the fast growing market of digital transactions in Asia's third largest economy.
Finance Minister Nirmala Sitharaman has also publicly asked banks to promote the use of RuPay cards to boost digital transactions in the country.
Mastercard and Visa count India as a key growth market, but have been jolted by a 2018 central bank directive for them to store payments data "only in India" for "unfettered supervisory access".
Banks are currently barred from issuing Mastercard-branded cards to any new customers, after the U.S. payments giants was found to have not fully complied with the data localisation rules.
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