The National Payment Corporation of India Ltd (NPCI) is planning to come up with India's first domestic payment service provider 'Rupay'. The 'Rupay' ATM card is aimed to target no frills account holders (NFAs) in collaboration with banks.
With this venture, majors in the payment space namely Visa and MasterCard are set to receive the first domestic competitor in Indian system.
All banks have been asked to open no frills accounts as part of the financial inclusion drive of the government.
NPCI aims to leverage on ATM switching infrastructure (the National Financial Switch) which will enable 'Rupay'cards to be used only on ATMs and biometric micro ATMs.
"As of now we are talking to four nationalised banks for introducing the Rupay ATM cards, which they will, to begin with, issue only to their no-frills accountholders. It will be a debit card which will work only on ATMs and biometric micro ATMs," said Mr A.P. Hota, Managing Director and Chief Executive Officer, NPCI.
"Banks will have to weigh whether to give ‘Rupay ATM cards' only to new customers or also to old customers. They will have to write to customers giving them the option to surrender existing cards and get new ATM cards. This itself is a big job," said Mr Hota.
Speaking about competition with Visa and MasterCard, he said, "Ultimately, the winner would be the one who can offer the better product and better service at an affordable rate. If MasterCard and Visa can really provide service at an affordable rate, they will succeed. To beat NPCI or Rupay card, they might really lower their price drastically. And if they can sustain that for a decade, really NPCI is out. We have better things to do."
In this regard NPCI seeks to collaborate with the 82 regional rural banks (RRBs) of the country too.