New Delhi: According to Indian Banks' Association (IBA), it is keenly interested in setting up an indigenous payment system for India. Given the explosive growth in credit card and electronic payments in India and the trend likely to continue very much in future, the need for such a payment system is definitely there.

The huge fees paid to VISA and MasterCard, which easily jumps over $100 million on an annual basis is a big enough reason for IBA to move in this direction. This concept is not new and has been floating in financial circles for long. India Pay the visualized payment system for India has IBA working on it for over a year now and industry experts believe that it is high time to pursue the implementation of this payment system.

As visualized India Pay is expected to replace the existing payment networks for domestic transactions, which is dominated by industry giants like Visa and MasterCard. However, the international payments will still be implemented in association with these payment networks. Presently the fees charged by Visa and MasterCard are relatively high and when replaced by indigenous payment system India Pay, this fees is expected to reduce drastically thereby making such transactions cheaper, at least for domestic transactions.

There are other similar payment systems set up by various governments, the most prominent example is the China Union Pay, which was set up in 2003. This payment network acts as the backbone of electronic payments in China and has tie-ups with Visa and MasterCard for international transactions. Singapore based Network for Electronic Transfers (NETS) is the electronic payment system for this island nation, Gulf Payments facilitates electronic payments in member countries of Middle-East region like Kuwait, Bahrain, Oman, Qatar, the UAE and Saudi Arabia.

India Pay in its initial stages is expected to cover credit card payments only and card to card money transfers, mobile money transfer and other electronic transactions could be implemented over due course of time. "The investment required for the entire project is being worked out and the business case will be prepared within two to three months," said Sanjay Sharma, IDBI Intech MD & CEO, who is also heading this project. According to him the resistance to this idea is expected to be very minimal and the chances of getting the approval are good since all the stake holders believe in the idea and it has a complete support of the Reserve Bank of India (RBI).