RuPay Goes Global: All You Should Know
Our Finance Minister, Nirmala Sitharaman announced RuPay payment mechanism has been accepted by Singapore and UAE. Also, those visiting Europe can now make payments via UPI. India is in talks with 30 different countries to make RuPay an acceptable part of the payment mechanism in their country. Earlier, Bhutan and Nepal had also agreed to accept RuPay. The attempt is to globalise the indigenous method of payment.
The government is also looking to recalibrate the National Payment Corporation Of India (NPCI), Unified Payment Interface (UPI), and Bharat Interface For Money (BHIM) to increase its interoperability. This will further help its internationalisation. NPCI has already entered into a partnership with Worldline, the European counterpart of NPCI. They handle payment and transaction services across Europe. Worldline's QR code-based mechanism will allow merchants' Point of Sale (PoS) systems in Europe to accept UPI payments from Indians using their mobile phones. Later on, customers will be able to make payments directly using credit and debit cards.
What is RuPay?
RuPay is an Indian multinational financial services and payment service system, conceived by the NPCI on 26th March 2012 (NPCI is a specialised division of RBI under the ministry of finance). It was created to fulfill the RBI's vision of establishing a domestic, open, and multilateral system of payments. The agenda was also to reduce dependency on Mastercard and Visa, which are global platforms. On the physical front, NPCI has issued 714 million indigenously developed RuPay cards to date. In a short span of time, it has achieved a monopoly in the market. As per one estimate, it has already monopolised 34 percent market by volume, and 30 percent by share. As per RBI, Rupay has captured 60 percent market in 2020, as against 15 percent in 2017. It is a domestic leader in a nutshell, and a helping hand of the government. If we look at the cards issued recently they all have the RuPay logo as against the Mastercard or Visa logo previously.
Why is it important to globalise RuPay?
It will bring ease of payment for RuPay card holders. Transaction via this card is 23 percent less than rival card brands. Additionally, they have less processing time and low processing charges. Thus globalising this payment method will make the life of Indian cardholders easier. RBI is also very strict when it comes to data security, which is another feather in RuPay's cap. These features will promote RuPay's leverage in the global playing field, while also promoting healthy among card companies, and diversifying the card options of the consumer. It will serve as a wake-up call for all those cards that have been overcharging across the processing chain thus far. It will also reduce the burden of purchasing forex before one goes abroad, as well as reduce the hassles of money transfers. This will also help get rid of financial constraints abroad for students as well as tourists. A niche advantage is with respect to the Russia-Ukraine war. Visa and Mastercard have suspended operations in Russia, which can serve as a golden opportunity for India to fill the gap. In an era of economic shift, recession, and global volatility, India is in a good space to assume an international monopoly.
