On 26th March 2012, National Payment Corporation of India (NPCI) launched Rupay – India’s own payment gateway network. ‘RuPay’ is a low-cost alternative to other payment gateways, such as MasterCard and VISA. Banks pay lower transaction processing fees as transactions are performed on the domestic payment network. This makes RuPay a viable digital payment solution for the rural, low, and middle-income segments in India. RuPay offers various benefits to its cardholders, such as cash-back on utility bills and ticket bookings, in-built accidental insurance cover, and online payments across e-commerce portals.
NPCI has established a domestic payment gateway to turn RuPay into a fully functional card. The payment gateway, ‘RuPay PaySecure’, has been promoted as a solution for various e-commerce portals in India. The gateway aims to nudge domestic consumers to make digital payments. The government provided important support to the RuPay card by bundling it with Basic Savings Bank Deposit Accounts (BSBDAs) opened under the national financial inclusion programme Pradhan Mantri Jan Dhan Yojana (PMJDY).
About 586 banks including commercial banks, regional rural banks (RRBs), and cooperative banks offer RuPay cards. A paper by JM Financial Research, 2016, titled “RuPay – Driving card penetration in India”, shows that RuPay cards had a market share of 38% or 247 million of the total 645 million debit cards in India. As of 20th June, 2018 there are 318.3 million
1Jan Dhan accounts, out of which 239.9 million account holders have received RuPay cards. Although 75% of PMJDY account holders have received RuPay cards, only 42.2% of these are active.
A study conducted by MicroSave on BMs and customers under PMJDY 2015 identified some challenges that banks and BMs faced in the distribution of RuPay cards.
The key findings indicate that there are operational challenges around the process to issue and distribute RuPay cards and PINs. The challenges on both the supply and demand-sides are explained below.
Customers are unaware that:
• They are eligible to apply for a RuPay card in the first place; this lack of awareness thus reduces penetration of RuPay cards;
• The RuPay card PIN becomes invalid after 45 days4 if the card is not used within this period after initial activation;
• A RuPay debit card comes with an in-built accidental cover of INR 100,000 (1424.8 USD)5 . However, to keep the insurance cover in-force, the cardholder needs to carry out at least one transaction every 45 days.6 Customers are largely unaware of this add-on benefit and the associated conditions – thus also reducing the potential use of RuPay cards.
Accessibility of card collection points:
• In many cases, rural customers do not collect their RuPay cards due to the long distances they have to travel to reach the bank branch, and because of lack of acceptance infrastructure in the villages (see next point);
• Those that do collect their cards find that there are no ATMs or stores with point of sales devices in the villages available to conduct transactions.
Technical know-how on usage
2 Figure 1: Referring to “RuPay cards issued (in percentage)”
3 https://www.pmjdy.gov.in/flc/Home.aspx, status as on 7th June, 2018
5 Conversion based on 17th August, 2018. Time – 17:30 from site www.unitconverts.net
6 NPCI circular dated on 31st March, 2015. Refer to 1st point of terms and conditions
8 A standard process conducted by banks, refer to FAQ; Question Number: 19.