RuPay's market share tops 60% in total cards issued, says RBI report

India’s indigenous payment network RuPay has cornered a significant market share in the domestic card market since its launch. As of November 30, 2020, RuPay’s market share has increased to more than 60 per cent of total cards issued, from merely 17-per cent market share in 2017, revealed the data released by the Reserve Bank of India (RBI) in its booklet on Payment Systems in India (2010-20).

As of November 2020, around 603.6-million RuPay cards have been issued by nearly 1,158 banks. But a majority of these are debit cards and only 970,000 are credit cards. However, experts have cautioned that this statistic must not be looked at in isolation.

Experts pointed out that one of the reasons behind gaining such market share could be the fact that a significant portion of RuPay cards are issued to accounts opened under the Pradhan Mantri Jan-Dhan Yojana (PMJDY). As of January 13, 2021, more than 306-million RuPay cards have been issued to 416.5 million accounts opened under PMJDY.

“What needs to be checked are the value and volume of transactions,” said experts.

Interestingly, the number of debit cards issued in the country between 2010-11 and 2019-20 increased from 227.8 million to 828.6 million, of which around 300 million were RuPay debit cards issued to basic savings bank deposit (BSBD) account holders.

On the other hand, during the same period, the number of credit cards issued also increased from 18 million to 57.7 million. The increase in cards has facilitated growth in both online and physical point-of-sale (PoS) terminal-based card payments, resulting in an increase in digital transactions.

“The drive for a less-cash economy in the wake of demonetisation in 2016 and the issue of RuPay cards for BSBD accounts has increased user acceptance in the interiors of the country where paying with a card was a novelty five years back. RuPay has its popular debit card and its increasingly accepted credit version as well,” the RBI said.

“We need to understand that cards issued is one statistic, but cards active is also an important aspect of it. Essentially, if we look at RuPay debit cards, the merchant discount rate is zero. So there is no revenue for banks or the issuers. Also, the value of transactions for debit cards is lower than credit cards. And, in credit cards, Visa and Mastercard are at the top. In fact, the value of total credit card transactions in PoS system is much higher than the value of all debit card transactions at PoS,” said Mihir Gandhi, partner, leader–PwC India.

RuPay, operated by the National Payments Corporation of India, is India’s home-grown card network. It competes against glo­bal peers, such as Visa and Mastercard, in the Indian market. The government has also been pushing banks to focus more on RuPay cards and provide it as the first option to customers.

“Visa and Mastercard target a specific customer segment who use the cards frequently and for high-value transactions. RuPay debit cards may not have that customer base. Both these card players smartly segment the customers and issue limited cards to highly affluent and high-value customers, so that a large number of transactions takes place through the cards,” he added.