American payment processing sevice leaders Visa and MasterCard will now be facing competition from an Indian rival.

India is coming up with IndiaPay, a new state-backed payment processing platform in the upcoming two years. It is expected that with the implementation of IndiaPay, the presence of MasterCard and Visa in the payment processing base will be shrinked. It is also expected to cut down transaction charges for banks.

Most of the debit and credit cards operative in the country at present are serviced by these two providers. IndiaPay would be India's first own card payment service provider. It is being developed with support from Reserve Bank of India.

The platform, IndiaPay is being developed by the National Payments Corporation of India (NPCI) which has been assigned the task by RBI.

"The NPCI has indicated that the system will be ready in 18-24 months," said G Padmanabhan, RBI chief general manager (department of payment & settlement and systems.