Visa, the international payment gateway, is offering packaged security solutions to Indian banks for cards issued on their platform, a move aimed at counter its domestic rival, National Payments Corporation of India (NPCI).
NPCI, set up by Indian banks to cater to their payment gateway needs, had offered lower charges to make inroads in the market share of international payment gateways.
Last week, Visa launched fraud prevention technology for its cards in India. “The move reinforces Visa’s leadership in the market and is likely to sit well with the regulatory direction that recently stressed the need for all India’s banks to adopt pro-active real-time fraud detection, increase consumer protection and pro-actively identify and deny fraudulent transactions,” said Visa.
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“Visa is offering packaged solutions along with their basic services. NPCI, on the other hand, is yet to devise such advanced technologies,” said the chairman and managing director of a large public sector bank. He said ATM fraud was rising and security solutions were imperative. “We had plans of completely shifting away from NPCI but they’ve asked for more time and as a public sector bank, we need to support them,” he said, requesting anonymity.
Against established international agencies such as Visa and MasterCard, NPCI has two strengths — cost effectiveness and rural reach. It offers services at a flat 40 per cent discount to what is charged by the international payment gateway providers. And, has planned for an international debit card on similar terms in June 2013.
“We charge only 90p per transaction, while international agencies charge on a percentage basis, apart from the annual fee,” said A P Hota, managing director and chief executive officer, NPCI.
To start with, NPCI is targeting rural regional banks and cooperative banks that do not offer any cards at all. So far, 22 banks, including three nationalised public sector ones and a private bank, have started issuing RuPay, the NPCI debit cards.
Hota said these cards were presently acceptable at 48,000 point-of-sales terminals in India. From January 2013, RuPay cards would be accepted at all 650,000 PoS terminals across the country. So far, 1.1 million RuPay debit cards have been issued.
“Banks are waiting for the card to get nationally as well as internationally accepted. We will then see more banks join,” said Hota.
International payment gateways say that given the huge popularity and further potential of card usage in India, there is a lot of space for competitors to grow without affecting them. Reserve Bank of India data shows the number of debit cards as of June this year was 290 million, about a fifth higher than a year earlier. While the growth in credit cards has seen a sharp decline in recent years, the number of debit cards have been growing consistently over a decade.
