India is fighting strongly with RuPay, but can it compete with US giants Visa, Mastercard?

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Visa, MasterCard, American Express and Discover currently dominate the international card network market globally. While all of these provide good services to their customers, they are based and operate in the US, increasing the dependence of all countries on the states. With this in mind, countries such as Russia and China have developed their own card networks: the company Mir and UnionPay respectively. India is also not far behind and has its own domestic card network, promoted by the National Payments Corporation of India, called RuPay.

RuPay has been hit hard in the country, and companies like Visa have filed complaints with the US government about the lack of a level playing field in India, according to a report. Reuters, However, even after such a big push, Visa, MasterCard and other US card networks continue to dominate the Indian market.

Russia’s boycott due to Ukraine’s invasion may spell a boom for RuPay, but will it be enough to propel the network into the major leagues? Or will it continue to be a modest local option in India?

Can RuPay compete with major US international card networks?

Rupay had issued over 600 million cards in 2020, according to the RBI. Most of these cards are debit cards, which are not associated with any incentives or benefits. This number has also been achieved by giving a push to the poorer sections of the society as part of the government’s financial inclusion drive.

according to this ReutersVisa currently has a market share of 44 per cent in India, followed by Mastercard at 36 per cent and RuPay with a combined share of another 20 per cent. However, Visa appears to be concerned that it is losing ground in many markets as they create their own national payment systems.

Apart from RuPay, these companies are also losing out on India’s UPI service, which the country wants to extend to the credit economy as well. The service is already hosting a host of credit cards for making payments, and may soon open to linking users’ credit accounts directly with banks.

Another problem that people will face for transfer to RuPay is its international transaction acceptance rate. NPCI has confirmed that it has already set up a dedicated entity to internationalize RuPay. If the country manages to sign the partners, it will be said to be a big win, as RuPay cards will become more accepted internationally. So far, RuPay has gained some acceptance in the overseas markets, thanks to the partnership with Discover Financial.

(Image: Razorpay)

While it is going to be an uphill battle for RuPay to get close to big companies like Visa and Mastercard, UPI is growing fast in the country. Apart from RuPay, the government is also pushing for UPI, and has signed an agreement with Mashreqbank PSC of Dubai, which allows Indians traveling to the Gulf emirate to use UPI every year.

According to RBI, UPI transactions back in 2021 UPI transactions overtook credit and debit card transactions by a huge margin. UPI person to person transaction amounted to Rs 6,691.3 billion, UPI person to merchant transaction amounted to Rs 1,577.2 billion. Credit card transactions amounted to Rs 939.1 billion and debit card transactions amounted to Rs 675.9 billion.

To strengthen RuPay, India could not stitch country-by-country deals, and could instead opt for Nexus, which is the Bank for International Settlements’ blueprint for 24/7, real-time cross- Border payment. This prototype was developed by NPCI and Monetary Authority of Singapore. Nexus will connect digital payment systems in more than 60 countries as the world wide web of payments.

India is fighting strongly with RuPay, but can it give competition to US giants Visa, Mastercard? Appeared first on BGR India.

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