Mumbai: A switchover to RuPay Card, the Indian version of Visa or MasterCard, can help domestic banks save as much Rs 300 crore annually in transaction fees, says the National Payments Corporation, which launched the card last week.
    
"Adoption of the RuPay Card will help banks save Rs 250-300 crore annually as our interchange charge is cheaper by up to 40 percent than what banks pay to foreign cards like Visa and MarsterCard," National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer A P Hota told.
    
After years of preparation and soft launch, NPCI commercially launched RuPay Card on March 26, with major banks such as SBI, BoB, UBI, BoI, Corporation Bank and Axis Bank launching their domestic debit cards on the RuPay platform.
    
This makes the country second after China to have an indigenous electronic payment card.
   
Typically, banks pay around 1.8 percent of the transaction value in interchange charges. This is shared between the payment gateway operators like Visa and MasterCard, the card issuing bank, and the merchant.
    
While the card-issuing bank charges around 0.25-30 percent of this, an equal amount is taken in by the merchant too, with the rest being retained by the card company such as Visa.
    
But Hota said NCPI will retain only up to 60 percent of this around 1.2 percent, going by the current fee structure.
    
According to the banks, foreign cards charge around USD 30,000-50,000 as one-time fee and around USD 10,000-30,000 quarterly.
    
In FY10, according to RBI, domestic banks coughed out Rs 490 crore in interchange charges to Visa and MasterCard.

For RuPay, there will be no one-time joining fee, and other charges would be around 40 percent less.
   
All the major banks are likely to be on the RuPay network in six months, Hota said, adding that there was no compulsion to switch to the RuPay.
   
"Our low cost should be reason enough for them to adopt our card. By March 2015, I expect at least half the market under the RuPay," he said.
   
His optimism comes from the low penetration among the regional rural banks, co-operative banks and small commercial banks due to high cost of joining foreign card payment system.
   
Another advantage, Hota said is that as the transaction happens domestically, it will lead to lower cost of clearing and settlement, apart from the facility of paying in rupee.
   
Being a not-for profit company also helps us lower the cost, Hota said.
   
He also said the RuPay would make debit cards safer by incorporating the pin number with each transaction. At present, only MasterCard requires the user to furnish the pin number every time the card is used.
   
RuPay will be accepted at all the 91,000 ATMs and over 6 lakh point of sale terminals in the country and in due course it will be accepted on the Internet and also at ATMs/PoS terminals abroad. NPCI has finalised an arrangement with payment gateway Discover for international acceptance.
   
According to the RBI data, there are nearly 27 crore debit cards in the country on Sunday.
   
SBI Managing Director and Chief Financial Officer Diwakar Gupta said though there is no compulsion, it makes business sense for banks to adopt RuPay.

(Agencies)