New Delhi: The regulator of the financial and banking sector in India RBI (Reserve Bank of India), wants that India should set up a credit card payment settlement company of its own, which should compete with the likes of VISA and MasterCard.

One such domestic credit card transaction settlement company- India Pay, was proposed by the Indian Banks' Association (IBA). The step was taken because it was predicted that the credit card transactions within India will jump three folds in the next five years.

Almost 95 per cent of all credit card based transactions are domestic in nature, but all the credit cards in India are affiliated to international credit card majors like Visa, MasterCard and American Express.

RBI wants to infuse competition into this credit card market. It has asked IBA to conduct a feasibility study on developing and setting up of an indigenous payment settlement system.

The Indian Banks' Association (IBA) was formed on the 26th September 1946 with 22 members. As on July 2007 IBA has 150 members. One of the major objectives of IBA is to initiate advance planning for introduction of new systems or services in the banking industry.

IBA will form a sub-committee for this purpose, whose goals will be to gather data on the card base, volumes and profile of transactions, alternate electronic modes of payment and projected growth.

IBA will also study how other countries like China had set up their own domestic payment system, the China Union Pay and estimate the infrastructure and other costs associated with setting up such a system in India.

An indigenous credit card payment settlement company to handle the credit card transactions in India would save a lot on commissions paid to Visa and MasterCard, as the major credit card transactions are domestic by nature.

For international transactions, the indigenous credit card payment system can connect to the networks of Visa, MasterCard, American Express or China Union Pay.