Years before Russia’s invasion of Ukraine, the Indian government realized that international card networks such as Mastercard, Visa, and American Express could become tools in the hands of foreign governments. That is why it launched ‘Rupay Card’ in 2012 to reduce the dominance of Visa and MasterCard on the emerging economic power of the country of 1.4 billion population. However, India still has a lot to do in this area.
Modi government is aggressively promoting Rupay
Prime Minister Narendra Modi had said in a speech about RuPay card in 2018, “Not all people can go to the border to protect the country. But if you make a habit of using RuPay card then it will also serve the country.” There’s a way to do it.”
Russia’s Mir and China’s UnionPay. Like (UnionPay Co.), RuPay is also India’s own card network, developed by the National Payment Corporation of India (NPCI). The Modi government has promoted it very aggressively in the last few years.
Visa-Mastercard furious, complains to America
The government’s emphasis on RuPay card can be understood from the fact that Visa had recently complained to the US government, it is not getting equal opportunity of competition in India. Mastercard has also said something similar. Meanwhile, Diners Club of Discover Financial Services, as well as MasterCard and American Express, have been in a legal dispute with the RBI over domestic data storage rules.
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Global card firms have fueled their country’s nationalist sentiments by deciding to boycott Russia after the recent attack on Ukraine. However, can Rupay Card ever become a real alternative to these global cards? Because to compete with well-grounded institutions in the financial system, it takes a lot more than a sense of patriotism.
How to prevent possible blockage?
The Narendra Modi government is angry with card networks in Western countries because they share processing fees with foreigners. Modi had mentioned this in his public speech in 2018. However, the decision by card platforms to ban the use of cards issued by Russian banks abroad besides Russia has raised a serious question about politics and plastic money as to how to handle a possible suspension of services.
What is the status of the card in the country?
Amidst active cooperation from the Government of India, more than Rs.60 crores have been released so far. With this, the market share of Rupay in India increased to over 60 per cent in the last months of 2020, from only 15 per cent in 2017. However, out of this, most of the cards issued by Rupay are debit cards and these have been issued with accounts opened under the Jan Dhan Yojana of the Modi government. Jan Dhan Yojana was brought to connect the poor population of the country with banking services. However, the richest 2% of the country’s population (25 to 30 million people) and those with high purchasing power are not ready to give up Visa and American Express cards just yet.
Same problem with credit card users. The country’s credit card customers spend about Rs 878 billion through their cards, which is a huge number of debit card users. These high spenders want cards that are acceptable overseas or can be easily purchased from them on foreign e-commerce websites as well. NPCI has now formed a body to make Rupay internationally acceptable. The tie-up with Discover Financial also gave Rupay some acceptance in overseas markets.
Why so much reliance on foreign technology?
The problem here though is that Discover Financial is an American firm. So why are we resorting to the technology of another foreign firm to reduce our dependence on foreign cards. Rupay has also signed a similar agreement with JCB International Company of Japan.
Digital payment has the power to overtake plastic money
However, in the meantime, India has developed another such technology for payment, which has eliminated the need for a card for payment. The name of this technology is UPI. This technology is completely Indian and transactions on it do not require any card but only your bank account linked. UPI payment is also becoming increasingly popular among users.
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