RuPay: Will it Disrupt the Domination of Visa and Mastercard in the Mainstream Digital Payments Ecosystem?
| Case Code: ECON099
Case Length: 11 Pages
Pub Date: 2022
Teaching Note: Available
Organization : National Payments Corporation of India (NPCI)
Industry : Financial Services
Countries : India
Themes: Government & Economy, Banks and Banking,Digital Strategy,Government Policies
Abstract Case Intro 1 Case Intro 2 Excerpts
RuPay was launched by the NPCI in March 2012 as an alternative to the MasterCard and Visa card schemes. It was started as IndiaPay and was later renamed as RuPay – a combination of rupee and payment. RuPay also provided payment gateway services for online payments..
The Challenge for Visa and Mastercard
With the aggressive push toward RuPay by the Indian Government, Visa and MasterCard began to lose their dominance in the Digital Payments Ecosystem in India. In January 2020, the government implemented a zero MDR on all RuPay and UPI transactions. MDR was a source of funding of the online transaction fees for the acquirer banks, who would pay a cut to Visa/Mastercard. This fee was usually passed on to the consumer by the merchants. Making MDR zero for RuPay and UPI (not for Visa and Mastercard) was expected to result in customers and merchants accelerating the growth of such transactions...
While the issuance of RuPay cards increased sharply by 2021, transactions from the cards did not go up commensurately. The increase in the volume of transactions would define the reliability and success of the card network. A large number of RuPay cards had been provided to people in Tier 1 and Tier 2 cities where English was not prevalent. But the transaction modes in many of the cases (like online banking) only provided support in English, which proved to be a big barrier to adoption. Thus, RuPay while being a solid product, still needed to build a strong ecosystem that supported the needs of India’s unbanked segments to bring about financial inclusion in the true sense...
Exhibit I: NPCI Products & Services
Exhibit II: Financial Inclusion Initiatives of RuPay
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